The stock market’s climb and the Dow Jones Industrial Average closing in March at its first new high since the Great Panic of 2008 prompted a lot of conflicting predictions from analysts.

Some say it marks the end of an impressive bull market, while others say it’s just the beginning of a much larger rally. These predictions may or may not turn out to be correct -- and they leave the investor confused.

However, as with the downturn four years ago, there are smart financial moves everyone can make to potentially take advantage of the new stock market high.

Rebalance - Rebalancing is the process of correcting an asset allocation that has become over-weighted or under-weighted due to a market fluctuation. In layman’s terms, it is the process of bringing all your investments back into a predefined mix of equities and fixed income assets. This is an important part of creating an investment strategy. Your portfolio may be over-weighted in stocks because of the new market high.  Rebalancing now would force you to harvest some of the gains. When the market is down, rebalancing would force you to buy at reduced prices.  Although there are no guarantees, buying low and selling high is a terrific investment strategy!

Donate Appreciated Securities – Anyone charitable minded may have a perfect opportunity to meet donation goals and double their tax savings using appreciated securities.  Provided you have owned the security for at least a year, you can donate the asset and use the current market value as a deduction on your taxes.  You also avoid paying capital gains tax on the asset if you had sold it.  This could be a significant tax savings on stocks purchased four years ago during the market low.

Exercise Stock Options - Stock compensation is an important tool of corporations today in attracting and retaining key employees. Many executives find a significant portion of their compensation being paid in the form of stock options.  This may be an excellent time to exercise some of your vested stock options if your company stock participated in the market rally.  Stock options come in two forms: non-qualified stock options (NQSOs) and incentive stock options (ISOs). Both forms come with expiration dates and price targets, but they differ significantly in their tax treatment. Be sure to consult your tax adviser before taking action.

Net Unrealized Appreciation (NUA) strategy - Withdraw company stock from your 401(k) and, instead of rolling it into an IRA, transfer it to a taxable brokerage account.  This strategy avoids paying ordinary income taxes (maximum rate 39.6%) on the stock's net unrealized appreciation and turns it into a capital gain (maximum rate of 20%).  There are strict rules to follow so consult a financial adviser who is experienced with this transaction before proceeding.

Qualified Charitable Distribution (QCD) - The American Taxpayer Relief Act of 2012 reinstated the ability to make a QCD through Dec. 31, 2013.  A QCD allows individuals over age 70½ to directly transfer up to $100,000 from an IRA account to one or more charities.  These transfers can be done using appreciated securities and are credited toward the IRA owner’s required minimum distribution for the year.

Stop Timing the Market – The Great Panic in 2008 and 2009 scared many investors out of stocks entirely.  The past four years may have been a missed opportunity as these investors waited on the sidelines for the right time to get back in.  You will never know when the stock market is going to go down or when it will recover.  The good news is you don’t have to know.  Devise a solid financial plan using an asset-allocation strategy that divides your money between a diversified equity portfolio and fixed income.   Rebalance your portfolio periodically to take advantage of stock market volatility.  The famous investor Peter Lynch said "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."

About Rick Rodgers

Certified Financial Planner® Rick Rodgers is president of Rodgers & Associates, “The Retirement Specialists,” in Lancaster, Pa., and author of “The New Three-Legged Stool: A Tax Efficient Approach to Retirement Planning.” He’s a Certified Retirement Counselor and member of the National Association of Personal Financial Advisers. Rodgers has been featured on national radio and TV shows, including “FOX Business News” and “The 700 Club,” and is available to speak at conferences and corporate events (www.RodgersSpeaks.com).  

Every year, our politicians talk about the need to simplify the tax code and every year, they make it more complex.

The average taxpayer will spend an estimated 23 hours completing their return this year.  Eighty percent of taxpayers will hire someone to do the work, or buy tax software, even though 64 percent of taxpayers don’t owe anything.

There are six definitions of a child; more than a dozen educational credits, and 16 different types of tax-favored savings plans. That may seem daunting, but with some basic knowledge and planning, you can avoid costly mistakes.

Here is a list of the seven common mistakes and missed deductions to help you prepare your 2012 tax return.

   1. Charitable deductions - cash.  Did you make a contribution to charity last year? The IRS is cracking down on bogus deductions, so be sure to follow the donation tax rules.  One of the most important rules is that you give to a charity with an IRS tax-exempt status. Don’t forget to take the mileage deduction when it applies. The IRS allows 14 cents per mile driven in service of charitable organizations.

   2. Charitable deductions – in kind.  Your used clothing donated to charity may not be seem worth much, but consider using valuation software to determine how much to claim. You may be pleasantly surprised. The same applies for furniture and other household items donated.  Clothing must be in good condition or better to take the deduction.

   3. Social Security number.  Privacy concerns caused the IRS to stop putting taxpayer Social Security numbers on tax package labels. Most of your tax information is keyed to your tax ID number. Tax ID number errors raise red flags with the IRS, which attempts to match reported income to tax returns.  This number is also important when claiming the Child Tax and Additional Child Tax credits and credits for educational expenses. Take time to verify that your tax ID number is correct on 1099s, W-2 forms and all tax documents to avoid delays processing your return.

   4. Dividend reinvestments. Each time a stock or mutual fund reinvests dividends, it’s the same as making a new purchase of shares. The amount of the reinvested dividend adds to your tax basis when you calculate your taxable gain from a sale. Make sure you don’t overpay the IRS. Mutual funds generally track the average basis of shares and automatically include reinvested dividends in the calculation.  Ultimately it’s up to you to make sure you calculate the gain properly.

  5. Unused deductions from 2011.  The tax code allows capital losses to offset capital gains. When losses exceed gains, the taxpayer can use only $3,000 of losses against other income. Any excess loss can be carried forward into future tax years. Don’t forget to carry the unused losses over to your 2012 tax return. Charitable deductions are capped based on the type of property donated and your adjusted gross income.  Excess deductions can also be carried into future years. Don't let carryovers get lost in the shuffle.

   6. Excess Roth contributions.  Single taxpayers whose modified adjusted gross income is between $110,000 - $125,000 ($173,000 - $183,000 for joint filers) cannot make a full Roth IRA contribution. Check this number when you complete your tax return.  Excess contributions are subject to a 6 percent penalty on the amount you contributed.

   7. Overlooked medical deductions. Health insurance premiums are an often, overlooked deduction. The portion paid by the employee is a deductible expense when you itemize. This includes the portion you pay to Medicare, which is usually deducted from Social Security. Transportation expenses for trips to medical facilities or doctors’ offices are also deductible. The IRS allows 23 cents per mile driven for medical purposes in 2012.

If you have made a mistake or missed a deduction you can file an amended tax return to correct the problem. Some tax payers worry filing an amended return will increase their chances of being audited. Amending the return doesn’t focus the IRS’s attention on your return but it will extend your exposure to their challenges. The IRS looks back three years from the date you file a return. When you amend your tax return you reopen the three-year window.

No one likes to deal with the IRS and taxes, but you could be leaving money on the table by not filing an amendment. If the total amount of tax you owe is smaller than your original return, the IRS will refund the difference.

Also file an amended return if the correction results in additional tax owed. The IRS will add interest to the amount if you amend after your filing deadline, but it rarely adds penalties. Correcting the mistake early saves interest and can avoid penalties.

Certified Financial Planner® Rick Rodgers is president of Rodgers & Associates, “The Retirement Specialists,” in Lancaster, Pa. He is a Certified Retirement Counselor and member of the National Association of Personal Financial Advisers. He is available to speak at conferences and corporate events. To contact him, visit:  www.RodgersSpeaks.com. 

For the more than five million consumers who still collect their Social Security by check, February is a crucial month for them. In order to save tax payers $1 billion over 10 years and mitigate Social Security fraud, the government has informed these participants that they need to sign up for direct deposit or the Direct Express debit card by March 1, 2013. The only participants exempt are those who were born on or before May 1921.

Although it’s hard for many people to change their ways, it’s important for them to know there are benefits by choosing either direct deposit or the government debit card. 

Direct Deposit Benefits

Direct Deposit is a free service that automatically deposits recurring income received into any checking or savings account chosen by the customer.

• It's convenient. Your money is deposited automatically into your checking or savings account, even when you are too busy to get to the bank.
• It's fast. You have same–day access to your money on the day of deposit.
• It's safe. Never worry about checks getting lost, delayed, or stolen.
• Checking accounts are also a great value for consumers: they offer convenience, and multiple ways to access/manage their money and security. In many cases, having direct deposit is one way to waive a monthly service fee on a checking account.

Government Debit Card Benefits

The government card is a prepaid debit card payment option. Cardholders can make purchases, pay bills and get cash back at thousands of locations nationwide. There are no sign-up fees or monthly account fees. Consumers can use their card to make purchases, to pay bills, and get cash from an ATM or financial institution.

   Switching from checks is fast, easy, convenient, safe and most importantly— it’s free! Consumers can go to: www.GoDirect.org, call the U.S. Treasury Electronic Payment

Solution Center's toll-free helpline at 1-800-333-1795 or simply visit with a local banker.

PITTSBURGH— While multiple layers of cyber security experts, work diligently around the clock to protect your bank accounts and personally identifiable information, the most powerful weapon in fighting cyber crime is you.

“Successfully defending against cyber criminals requires a continuous team effort,” said Holly Ridgeway, chief information security officer at PNC Bank, N.A. “PNC aggressively protects our customers. But, the customer must also take simple, low or no cost precautions to better protect themselves by tightening security around home computers and mobile devices.”

PNC encourages you to join the cyber security effort.  Protect your personal information and avoid computer fraud by taking some preventative steps now:

1. Passwords and Person Identification Numbers (PIN)— Avoid using any type of personal information, including social security numbers, birthdays, significant names and account numbers, as PIN numbers or passwords. This personal information is easy to find and could increase your risk of compromising online accounts. If you are currently using personal information as passwords, it is a good idea to change them.

2. Differentiate your Passwords— Do not use the same password for social media sites and shopping that you use to conduct financial transactions.

3. Sluggish Computer Signals Problem—If your home computer becomes very slow, or takes a long time to load pages that is an indication that spyware could be present. Use a reputable spyware removal tool regularly to minimize the risk of your information being stolen.

4. Wi-Fi Warning— Before logging on to a wi-fi connection in a public place (coffee shops, hotels, etc), confirm with an employee the EXACT name of their network and login steps. Hackers can hijack hotspots in public places to lure users to their own network, capturing pass codes and other valuable information.

5. Public Exchange— Avoid sharing confidential/sensitive information when logged onto a public network. You never know who might be watching.

6. Sanitize Your Cyber Space— Make sure you have the latest security software and operating system updates (patches) to defend against threats such as malware, viruses and phishing scams. Update apps frequently to stay current with new threats.

7. Click with Care— Be cautious of flashing “special offers” and pop-ups, especially when that click redirects you to an unexpected website. Good rule is never to provide personal information on a site that you do not know or cannot confirm is secure.

8. Do Not Donate Data— When you plan to upgrade your personal device, before donating or giving old devices to a family member, be sure wipe it clean of all data. Clear your browser history and cache too.

For more information about how to prevent fraud and to protect the security and confidentiality of your personal information, visit the PNC Security Assurance page on www.pnc.com.