Taxes http://www.wisebread.com/taxonomy/term/4811/all en-US Here's How to Deduct Charitable Donations on Your Taxes http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-to-deduct-charitable-donations-on-your-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_donating_clothes_000023595527.jpg" alt="Woman deducting charitable donations on her taxes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Donating to a reputable charity is a great way to help organizations that provide assistance to the less fortunate. As a bonus, these charitable contributions can also leave you with a smaller bill come income-tax time, since the IRS allows you to deduct a portion of your yearly charitable contributions on your federal income taxes. This means that your generosity can leave you owing fewer dollars to the IRS on April 15. (See also: <a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a>)</p> <p>But as with most matters involving the IRS, there are rules you need to follow when claiming charitable contributions. And if your charitable deductions seem overly high for your income? That could trigger an audit.</p> <p>The rule for charitable contributions, both cash and non-cash, comes down two simple principles: Don't lie about how much you're giving as a way to claim a bigger deduction. And when you do make your contributions, make sure to get receipts &mdash; and in some cases, appraisal letters &mdash; that verify your donations.</p> <h2>Be Honest</h2> <p>Bill Farmer, owner and president of HTI Tax Service in Lexington, Kentucky, gives this example: He recently worked with a couple who wanted to claim more than $11,000 in cash charitable contributions on a combined yearly income of just $61,000. The couple also had mortgage statements showing that they had paid more than $10,000 in interest and another $2,500 in taxes on their home.</p> <p>Those three numbers alone &mdash; mortgage interest, taxes, and charitable contributions &mdash; equaled more than a third of their income, an unrealistically high amount. The couple also wanted to claim an additional $10,900 in contributions to Goodwill on top of this figure.</p> <p>Farmer correctly told the couple that for donations of more than $5,000, they'd need to provide not only receipts for their charitable contributions but also a written appraisal stating how much the donations were actually worth. When the couple heard that, they asked Farmer to instead list their donation to Goodwill as $4,999, just under the limit.</p> <p>&quot;They were begging to get audited,&quot; Farmer said.</p> <h2>Common Mistakes</h2> <p>Unfortunately, such moves aren't that rare. Eric Meermann, a certified financial planner and portfolio manager with Palisades Hudson Financial Group's Scarsdale, New York office, said that charitable contributions are often a red flag when it comes audits. This is especially true for those contributions that are non-cash, such as when filers donate old clothing to the Salvation Army and claim that the donations are worth $4,000.</p> <p>&quot;Charitable contributions are open to mistakes,&quot; Meermann said. &quot;If you donate a bunch of shoes to the United Way, how do you come up with an accurate value for that? The key is to be reasonable.&quot;</p> <h3>Cash Donations Are Easiest to Deduct</h3> <p>The IRS' rules for governing charitable contributions are rather strict, but cash contributions are easier to handle. If you write a check to a charity or make a donation to one with your credit card of less than $250, you'll need a receipt showing the date and amount of your contribution. If you don't have that, you can also rely on a cancelled check, credit card statement, or other bank record showing that you made the donation.</p> <p>You won't have to attach this receipt or other documents to your income-tax return. But you will need these documents if the IRS later asks you to verify your contribution.</p> <p>For a cash contribution of $250 or more, you don't have this leeway: You must get a written receipt from the charity describing your donation. Canceled checks or credit card statements aren't enough.</p> <h3>Non-Cash Contributions Are Tricky</h3> <p>Non-cash contributions are more complicated. For non-cash donations of up to $250, you'll need a receipt from the charity showing that you actually made the donation. The receipt must state the date and location of your donation, the name of the organization, and a description of what you donated. You won't have to attach this receipt to your income-tax returns, but you will need it if the IRS contacts you later asking for proof of your charitable donations.</p> <p>If your non-cash donation is more than $250, you'll again need a receipt from the charity that describes what you are donating. But this receipt should also list whether you received any goods or services from the charity in exchange for your donation. The receipt must list the goods or services that you received and provide an estimated value for them.</p> <p>If you donate more than $500 of non-cash contributions in a calendar year, you must also file IRS Form 8283 Noncash Charitable Contributions with your income taxes. If the total value of your gifts is less than $5,000, you'll only have to fill out Section A of this form.</p> <h3>Really Big Contributions Require More Paperwork</h3> <p>If you are making a big contribution of more than $5,000, you'll need an appraisal letter. This holds true whether you are giving away a single item worth more than $5,000 &mdash; such as a valuable painting &mdash; or several items that totaled together equal more than $5,000, such as boxes of antique plates from your attic.</p> <p>The person writing your appraisal letter must be a professional that the IRS lists as a &quot;qualified appraiser.&quot; This professional must sign the Form 8382 that you attach to your income taxes.</p> <p>If the IRS should send you a letter asking for proof of your charitable contributions, don't panic. Meermann said that if you do have verification of your donations, and you were honest about what you gave, you should have no worries.</p> <p>&quot;It's completely normal for the IRS to ask filers about their charitable contributions,&quot; Meermann said. &quot;It doesn't necessarily mean anything bad is going to happen to you.&quot;</p> <p><em>Have you ever run afoul of the IRS' tax and charity rules?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them">6 Things the IRS Doesn&#039;t Want You to Know About Them</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cant-pay-your-taxes-heres-what-to-do">Can&#039;t Pay Your Taxes? Here&#039;s What to Do</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audits cash charitable deductions contributions donations IRS Wed, 10 Feb 2016 14:00:05 +0000 Dan Rafter 1653875 at http://www.wisebread.com Best Money Tips: Get Ahead on Next Year's Taxes http://www.wisebread.com/best-money-tips-get-ahead-on-next-years-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-get-ahead-on-next-years-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_computer_paperwork_000042286072.jpg" alt="Woman getting ahead on next year&#039;s taxes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found ways to get ahead on next year&rsquo;s taxes, job hunting tips for moms who want to work from home, and amazing ways to use balloons.</p> <h2>Top 5 Articles</h2> <p><a href="https://www.dailyworth.com/posts/4129-how-to-prepare-for-next-year-s-taxes">5 Ways to Get Ahead on Next Year&rsquo;s Taxes</a> &mdash; Start putting all the documents you'll need in a shoebox or accordion folder, or make it a habit to scan your paper receipts. [Daily Worth]</p> <p><a href="http://bargainbriana.com/job-hunting-tips-mothers-want-work-home/">Job Hunting Tips for Mothers Who Want to Work From Home</a> &mdash; Use a calendar and spreadsheet to plan and track your job hunting activity. [Bargain Briana]</p> <p><a href="http://www.popsugar.com/smart-living/Uses-Balloons-31135985#photo-31135985">23 Amazing Ways to Use Balloons</a> &mdash; You can use balloons to make chocolate cups, then fill the cups with other tasty treats! [PopSugar Smart Living]</p> <p><a href="http://www.kiplinger.com/slideshow/taxes/T054-S001-middle-class-tax-breaks-for-the-rest-of-us/index.html">9 Tax Breaks for the Middle Class</a> &mdash; Do you know about the Saver's Tax Credit and the Earned Income Tax Credit? [Kiplinger]</p> <p><a href="http://www.csmonitor.com/Business/Saving-Money/2016/0131/Valentine-s-Day-prices-for-roses-are-already-going-through-the-roof">Valentine's Day prices for roses are already going through the roof</a> &mdash; The average price of a dozen roses has risen over 12% since January 1st. [The Monitor]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.dumblittleman.com/2016/02/putting-first-may-least-selfish-thing-can.html">When Putting Yourself First May Be The Least Selfish Thing You Can Do</a> &mdash; Paying attention to your own self-care allows you to give, do, and be more for other people. [Dumb Little Man]</p> <p><a href="http://www.cheapism.com/blog/4102/getting-ready-for-a-date">Date Night Prep: 10 Money-Saving Tips</a> &mdash; Before setting plans for a date, search for deals on food, events, and activities in your area. [Cheapism]</p> <p><a href="http://frugalbeautiful.com/blog/adopting-pet-herestofirsts/">What To Know Before Adopting Your First Pet</a> &mdash; Adopting a pet is a big commitment, especially considering the time and structure needed to train them properly. You need to be ready to care for them even through big changes in your life, like having kids or relocating for work. [Frugal Beautiful]</p> <p><a href="http://www.financiallypoor.com/home-ownership/essential-tips-finding-best-property/">Essential Tips For Finding The Best Property</a> &mdash; There are many factors to consider when you're house hunting. Make sure you know what your daily commute would be like, and it's a good idea to check the crime statistics for that area. [Financially Poor]</p> <p><a href="http://parentingsquad.com/how-to-create-a-diy-project-runway-for-your-kids">How to Create a DIY Project Runway for Your Kids</a> &mdash; Having your own Project Runway competition is a great way for kids to stretch their creative muscles. [Parenting Squad]</p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-get-ahead-on-next-years-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/bar-stool-economics-0">Bar Stool Economics</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-marriage-penalty-of-taxes-in-america-how-does-it-affect-you">The &quot;marriage penalty&quot; of taxes in America - how does it affect you?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/winter-is-coming-make-these-6-money-moves-now">Winter Is Coming: Make These 6 Money Moves Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes best money tips taxes Thu, 04 Feb 2016 00:15:33 +0000 Amy Lu 1649759 at http://www.wisebread.com 4 Ways to Reduce Your Tax Bill With Bonds http://www.wisebread.com/4-ways-to-reduce-your-tax-bill-with-bonds <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-to-reduce-your-tax-bill-with-bonds" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/father_daughter_computer_000082622141.jpg" alt="Man finding ways to reduce his tax bills with bonds" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Financial advisors recommend bonds to investors for portfolio diversification, as a fixed income investment strategy, and to hedge against inflation. Even better, some major bond classes can help you reduce your tax bill, too.</p> <p>What's more, they are low-risk investments. Here's how you can reduce your tax bill with bonds. (See also:&nbsp;<a href="http://www.wisebread.com/9-tax-friendly-ways-to-save-beyond-your-retirement-fund">9 Tax-Friendly Ways to Save Beyond Your Retirement Fund</a>)</p> <h2>1. Invest in Municipal Bonds</h2> <p>Municipal bonds have long garnered the attention of high-earners seeking to minimize their tax obligations. Muni bonds are tax-exempt at the federal level and, in some cases, local and state tax exempt as well, especially if the investor resides in the issuing state or municipality.</p> <p>Though munis faced some scrutiny during the financial crisis, many &mdash; if not most &mdash; munis deserve a second look now that local government finances are on much more stable footing.</p> <h2>2. Buy U.S. Treasury Bonds</h2> <p>U.S. Treasury bonds pay interest income once every six months. That income is exempt from state, local, and the alternative minimum tax. Some treasury bonds can also <a href="https://www.fidelity.com/fixed-income-bonds/individual-bonds/us-treasury-bonds">reduce your tax bill</a>, even if investing outside of a retirement account.</p> <h2>3. Purchase Zero Coupon Bonds</h2> <p>Zero coupon bonds are exempt from state and local tax. As their name suggests, these government bonds pay no interest, but often offer higher yields. Investors beware, however: Zero coupon bonds come with higher risks than their traditional counterparts, so consider the risk-reward trade-offs before investing in this asset class.</p> <h2>4. Put Bonds Inside Tax-Free and Tax-Deferred Accounts</h2> <p>Investors can defer any taxes owed on interest income by delaying distributions and holding these investments in a tax-deferred retirement account, such as an IRA or 401K. Once the money is withdrawn at retirement age, it'll be taxed based on the individual's tax bracket. Using the same strategy, if they are kept in a tax-free account, such as a Roth IRA or Roth 401K, distributions taken at retirement are tax-free.</p> <p><em>Are bonds in your portfolio? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/4-ways-to-reduce-your-tax-bill-with-bonds">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-simple-guide-to-series-i-savings-bonds-i-bonds">A Simple Guide to Series I Savings Bonds (I-Bonds)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-5-bond-funds">Stabilize Your Portfolio With These 5 Bond Funds</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-prepare-for-a-stock-market-dive">8 Ways to Prepare for a Stock Market Dive</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Taxes 401 k bonds IRA municipal tax-deferred treasury Tue, 02 Feb 2016 22:00:06 +0000 Qiana Chavaia 1649194 at http://www.wisebread.com 11 Ways the Government Pays You to Live Green http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/11-ways-the-government-pays-you-to-live-green" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_riding_bikes_000063700085.jpg" alt="Couple finding ways the government pays them to live green" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you care about the planet? Do you care about saving money? Those ideas are not mutually exclusive.</p> <p>If you are environmentally conscious, it's worth knowing that you can &quot;live green&quot; and get help from the government to do so. Federal, state, and local governments offer tax breaks, credits, and straight cash payments to people who keep an eye on their carbon footprints.</p> <p>There is plenty of help available, and it's worth checking with the IRS and your state and local governments to see where you can save. Here are 11 big ways that governments will pay you to live green.</p> <h2>1. Cash for Burning Biomass</h2> <p>Forget the oil burner or electric heat pump. You can get government money by using a biomass stove, which burns things like wood, plants, grass, and even corn. There's a federal tax credit of up to $300 for stoves that use biomass, and some states have additional credits. (Maryland, for example, will rebate up to $700 for a new pellet burning stove.)</p> <h2>2. Tax Breaks for Electric Cars</h2> <p>Electric and hybrid vehicles are cool, but they often have a higher price tag than regular automobiles. So the federal government wants to help out by offering a tax credit of up to $7,500. Take that into account the next time you're eyeing a Tesla, Toyota Prius, or Nissan Leaf.</p> <h2>3. Incentives to Use Alternative Energy</h2> <p>There are are all kinds of incentives for you to electrify your home using something other than fossil fuels. There's a 30% federal tax credit for installing a geothermal heat pump, wind turbines, or solar panels, for example. There are also grant programs at the state and local level. The idea is that these credits will offset at least some of the relatively high cost of installing these systems, thus making it easier financially for homeowners to go green.</p> <h2>4. Money for a Home Energy Audit</h2> <p>There are some local governments that will give you cash just for an examination of how you use energy in your home. In most cases, you will get recommendations on ways to use less energy, but you can get the tax credit even if you don't make any changes. Takoma Park, MD offers $100 just to get the audit done.</p> <h2>5. Money for Windows, Doors, and Skylights</h2> <p>Sometimes getting new windows isn't just about making your house look pretty. If they exceed EnergyStar requirements for efficiency, you can get a tax credit of up to $500 on the cost. Good windows and doors can help keep out drafts and help heating and cooling systems work more efficiently. This credit also applies to new insulation and your roof.</p> <h2>6. Cash Back on Appliances</h2> <p>The federal government used to give credits for energy-efficient refrigerators and the like, but that's been phased out. However, there still may be localities that offer similar incentives for EnergyStar rated appliances. (See also:&nbsp;<a href="http://www.wisebread.com/13-small-kitchen-appliances-that-arent-worth-the-money">13 Small Kitchen Appliances That Aren't Worth the Money</a>)</p> <h2>7. Public Transit Subsidies</h2> <p>The federal government and some state governments encourage employers to offer a pre-tax benefit for workers who use public transportation to commute. Under the federal tax break, workers can reduce their taxable income by as much as $255 per month. The federal benefit also works for parking, so it's not entirely a &quot;green&quot; incentive. Some states (including California) allow workers to &quot;cash-out&quot; the parking benefit if they bike, walk, or carpool to work.</p> <h2>8. Bike-to-Work Incentives</h2> <p>The IRS allows employers to reimburse workers for up to $20 a month for expenses related to biking to work.</p> <h2>9. Tax Incentives for Your Home Office</h2> <p>The federal and state government want to make it easier for you to work from home. Many expenses related to having a home office, including equipment, furniture, and some utilities, can be tax deductible. In 2013, the IRS announced a &quot;simplified&quot; deduction that allows for up to $5 per square foot of space used as a home office (up to 300 square feet.) To qualify, you must have a space that is used &quot;exclusively&quot; for work.</p> <h2>10. Tax Deductions for Supporting National Parks</h2> <p>The National Park Service operates 59 parks, most of which are known for their natural beauty and prized by conservationists. If you're the type of person who likes to camp, hike, and climb, your donation to the National Park Foundation is tax-deductible. Additionally, the Park Service will offer free admission to parks on 16 dates in 2016.</p> <h2>11. Cash for Reclaimed Water</h2> <p>In many states, businesses can reduce their taxable income by using reclaimed wastewater, or so-called &quot;greywater.&quot; And homeowners in states including Arizona can get a tax deduction on equipment to allow for recycled water usage. &quot;Greywater&quot; is generally not good to drink, but can be used for toilets, crop irrigation, and other non-potable uses.</p> <p><em>Have you taken advantage of any of these eco incentives?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-the-courtesy-flush-dead">Is the courtesy flush dead?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/50-ways-to-have-free-outdoor-fun">50+ Ways to Have Free Outdoor Fun</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Green Living Lifestyle Taxes alternative energy deductions electric cars environment incentives Wed, 20 Jan 2016 16:00:03 +0000 Tim Lemke 1639403 at http://www.wisebread.com 5 Important Tax Changes for 2016 http://www.wisebread.com/5-important-tax-changes-for-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-important-tax-changes-for-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000054433640.jpg" alt="Child learning important tax changes for 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>What comes with a new year? Changes to the federal tax code, of course. And 2016 is no exception.</p> <p>These changes could mean big financial penalties if you don't have health insurance. Or they could bring you big savings if you happen to own a small business. Overall, the changes to the tax code that Congress enacted last year are beneficial to consumers, according to Dave Du, vice president of consumer advocacy at TaxAudit.com.</p> <p>&quot;With just days to go before the end of the year, Congress finally extended most of the tax breaks which were set to expire,&quot; Du said. &quot;Some of these provisions &mdash; like the definition of racehorse as property &mdash; won't impact too many of us, but there's much good news for taxpayers this year.&quot;</p> <p>One example? You can file later this year. The deadline for filing your income taxes this year is April 18 instead of April 15, thanks to something called Emancipation Day in Washington, D.C.</p> <p>Here are five other big tax changes you should be prepared for this year.</p> <h2>1. A Climbing Health Insurance Penalty</h2> <p>One of the bigger changes to the tax code this year is actually a punitive one: An increase in the penalty for not having health insurance that meets the requirements of the Affordable Care Act.</p> <p>Micah Friedman, a Roanoke, Virginia-based Certified Public Accountant, said that for the 2015 tax year &mdash; those are the taxes you'll be filing by April 18 &mdash; filers will have to pay a penalty of $325 for every uninsured adult and $162.50 for every uninsured dependent child, or 2% of your taxable income &mdash; whichever number is greater.</p> <p>That's a significant increase. For the 2014 tax year, those numbers stood at $95 and $47.50, or 1% of your taxable income. &quot;And in 2016, it gets even worse,&quot; Friedman said.</p> <p>For the 2016 tax year &mdash; the taxes you will file by April of 2017 &mdash; the penalty for not having insurance rises to $695 per adult and $347.50 per child, or 2.5% of your income. The message is clear: If you don't have acceptable health insurance, it's time to get it. (See also:&nbsp;<a href="http://www.wisebread.com/avoid-these-5-costly-health-insurance-mistakes">Avoid These 5 Costly Health Insurance Mistakes</a>)</p> <h2>2. New Health Insurance Forms</h2> <p>You can also expect to receive a new form or two in the mail relating to health insurance. If you've purchased health insurance through the federal government's Health Insurance Marketplace, you'll receive Form 1095-A. This isn't a change &mdash; the government began mailing this form out for the 2014 tax year.</p> <p>But there are two new health insurance forms for the 2015 tax year. Form 1095-B is a statement from your health insurance company verifying that you and other members of your household have insurance coverage that meets the requirements of the Affordable Care Act. This form is only sent to taxpayers who get their insurance from somewhere other than the Health Insurance Marketplace, such as from their employer. Form 1095-C is a statement from your employer that provides details about your employer-sponsored health benefits.</p> <p>Many taxpayers will receive both 1095-B and 1095-C, of course. The key fact to realize? You probably won't have to do anything with these forms, said Andrew Oswalt, Certified Public Account for Cedar Rapids, Iowa-based TaxACT.</p> <p>&quot;The new forms could be confusing because most people will think they have to do something with them,&quot; Oswalt said. &quot;The reality is, they'll simply need to mark a checkbox on their Form 1040 when filing and keep the forms 1095-B and 1095-C for their records.&quot;</p> <h2>3. A Tax Break for Small Business Owners</h2> <p>Priyanka Prakash, finance specialist at loan-search service FitBiz Loans, said that small business owners need to be aware of Section 179 of the tax code &mdash; a new tax law that lets them deduct up to $500,000 of qualifying equipment on their tax returns.</p> <p>To qualify for this deduction, the equipment must be used primarily for business purposes, Prakash said. The equipment must also have been put into use during the 2015 calendar year.</p> <p>&quot;This covers a wide range of equipment, from computers to furniture to business vehicles,&quot; Prakash said.</p> <p>Prakash gives this example: If a business purchases office equipment worth $100,000, it can then deduct that entire purchase amount on its taxes. If the business has a tax rate of 30%, Section 179 will save it $30,000 in taxes. Previously, business owners could only deduct a small amount every year based on the life of the equipment.</p> <p>&quot;Section 179 saves small businesses a lot of money,&quot; Prakash said.</p> <h2>4. A Break for College Students</h2> <p>Tom Wheelwright, a Certified Public Account and author of <a href="http://www.amazon.com/gp/product/1937832058/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=1937832058&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=TFRKWZZ4OXTQ44N2" target="_blank">Tax-Free Wealth</a>, said that the 2015 tax year brought an important break for college students who are filing their own taxes or parents who claim these students as dependents.</p> <p>Congress made permanent the American Opportunity Tax Credit, which gives college students a credit of $2,500 per year for college tuition, fees, and course materials. Parents can claim the exemption for their college-age students as long as they claim these students as dependents on their income taxes.</p> <h2>5. A Boon for Heads of Household</h2> <p>The standard deduction is set to rise &mdash; a bit &mdash; for heads of households. The standard deductions that most taxpayers can claim in 2016 haven't risen for single taxpayers or married couples filing jointly or separately. Blame that on low inflation.</p> <p>But the standard deduction for taxpayers filing as the head of their households is going up a bit, rising $50 for 2016. That brings that standard deduction up to $9,300 in 2016.</p> <p><em>Are you ready for tax time this year?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-important-tax-changes-for-2016">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps">Avoid the Tax Season Rush With These Early Prep Steps</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Top Three Tax Facts to Know for 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/not-so-fast-5-things-you-must-do-after-filing-taxes">Not So Fast! 5 Things You Must Do After Filing Taxes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes deductions filing health insurance IRS penalties tax breaks Tue, 19 Jan 2016 12:00:03 +0000 Dan Rafter 1639404 at http://www.wisebread.com 8 Jaw-Dropping Tax Havens of the Filthy Rich http://www.wisebread.com/8-jaw-dropping-tax-havens-of-the-filthy-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-jaw-dropping-tax-havens-of-the-filthy-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000035064692.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are roughly 80 countries that are considered tax havens. These are secrecy jurisdictions with incredibly low to no taxes. (See also: <a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees?ref=seealso">7 States With the Lowest Taxes for Retirees</a>).</p> <p>Billionaires and millionaires flock to these places to take advantage of tax loopholes that allow them to establish offshore bank accounts and shell corporations, and pay virtually nothing. By doing so, they avoid the otherwise high tax rates they would pay in their home countries, without renouncing their citizenship.</p> <p>Recently, the IRS announced plans to go after U.S. citizens holding offshore accounts. Still, that hasn't been a deterrent for a lot of wealthy individuals seeking to escape steep tax implications. Done correctly, offshore banking is completely legal. And you don't have to have tons of cash in order to seek out the reprieve tax havens offer. Because, in addition to the lenient tax laws, many of these nations are exotic travel destinations that offer outside investors simplified pathways to citizenship. Take a closer look.</p> <h2>1. Belize</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/belize_ocean_scene_000063940785.jpg" width="605" height="340" alt="" /></p> <p>Best known for the scuba diving and its astonishing Barrier Reef, Belize is a tropical paradise in the Caribbean Sea and just the place for anyone seeking discretion. English is the country's native language, though many habitants also speak Spanish. There are two pathways to citizenship: Permanent Residence and the Qualified Retired Person (QRP) program.</p> <p>Permanent Residence status is applicable if you intend to earn income as an employee. Otherwise, you would be considered a QRP and all you have to do is spend four weeks of the year in Belize, while meeting a minimum yearly retirement income threshold. As a QRP, foreign income is tax-exempt and there's no tax on capital gains or inheritances.</p> <p><strong>Language: </strong>English, Spanish, and Creole</p> <p><strong>Population: </strong>332,000</p> <h2>2. British Virgin Islands</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/british_virgin_islands_000044344594.jpg" width="605" height="340" alt="" /></p> <p>Another Caribbean oasis, The British Virgin Islands (BVI) has long been known for its banking secrecy. BVI's income tax rate is 0% &mdash; there's no corporation, capital gains, gift, sales, profit, or inheritance tax. And property owners or real estate investors can become part-time residents, which permits you to stay in the country six months out of the year. There is a nominal property tax of 1.5% of the assessed value per annum.</p> <p><strong>Language: </strong>English</p> <p><strong>Population: </strong>32,680</p> <h2>3. Cayman Islands</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/cayman_islands_beach_000035064692.jpg" width="605" height="340" alt="" /></p> <p>The Cayman Islands has been on the radar for multinational U.S.-based Fortune 500 companies with offshore subsidiaries for decades. Apple, IBM, and others are just a few on the list. The country has no corporate tax &mdash; and no taxes on income, capital gains, profits, or estates, either.</p> <p><strong>Language: </strong>English &nbsp;</p> <p><strong>Population: </strong>58,435</p> <h2>4. Costa Rica</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/costa_rica_waterfall_000021667287.jpg" width="605" height="340" alt="" /></p> <p>The gorgeous country of Costa Rica attracted 2.52 million tourists last year. This Central American nation is known for its rainforests, pristine beaches, and waterfalls. Corporations pay no income tax on gains from outside the jurisdiction, and no interest, capital gains, or dividend tax. &nbsp;</p> <p><strong>Language: </strong>Spanish</p> <p><strong>Population: </strong>4.872 million</p> <h2>5. Monaco</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/monoco_castle_000015588648.jpg" width="605" height="340" alt="" /></p> <p>Home of the famed Monte Carlo Casino and the Monaco Grand Prix, Monaco is a playground for wealthy jetsetters from around the world. Monaco has no income tax, capital gains, or inheritance taxes.</p> <p><strong>Language:</strong> French</p> <p><strong>Population: </strong>37,831</p> <h2>6. Seychelles</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/seychelles_beach_000058004304.jpg" width="605" height="340" alt="" /></p> <p>The Seychelles is comprised of 115 paradise islands off the west coast of Africa. The area is plush with coral reefs, pristine white beaches, luxury resorts, and local culture. There is no income tax, capital gains tax, gift tax, or property tax. To become a permanent resident, the country only requires that you reside in the Seychelles at least five days per year, and that you make a transfer of at least $10,000 per year into your bank account there.</p> <p><strong>Langu</strong><strong>age:</strong> Seychellois Creole, English, and French</p> <p><strong>Population: </strong>89,173</p> <h2>7. Panama</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/panama_city_000009775119.jpg" width="605" height="340" alt="" /></p> <p>Panama has one of the fastest growing economies in Central America. It doesn't share tax treaties with other countries, and is under no obligation to share financial information with any authority. Banking discretion in Panama is among the most secretive. The country has no income, dividend, or capital gains tax.</p> <p><strong>Language:</strong> Spanish</p> <p><strong>Population: </strong>3.864 million</p> <h2>8. Puerto Rico</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/san_juan_000046617994.jpg" width="605" height="340" alt="" /></p> <p>Puerto Rico is a United States territory, but it is a Commonwealth government that has its own tax laws. In 2012, the country enacted a law that deems it a tax haven for U.S. citizens living on the island a total of 183 days per year; <a href="http://www.businessinsider.com/puerto-rico-tax-law-act-22-2013-3">Act 20 &amp; 22</a>, and <a href="https://www.law.cornell.edu/uscode/text/26/933">section 933</a> of the uniform tax code allows U.S. citizens to avoid paying taxes on interest, dividends, and capital gains without renouncing citizenship.</p> <p><strong>Native Language:</strong> Spanish and English</p> <p><strong>Population: </strong>3.548 million</p> <p><em>Have you ever visited any of these tax havens?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/8-jaw-dropping-tax-havens-of-the-filthy-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-ways-the-rich-get-richer">5 Surprising Ways the Rich Get Richer</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Here&#039;s How to Deduct Charitable Donations on Your Taxes</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-to-reduce-your-tax-bill-with-bonds">4 Ways to Reduce Your Tax Bill With Bonds</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes offshore banking tax havens tax loopholes the rich wealthy Fri, 18 Dec 2015 14:00:08 +0000 Qiana Chavaia 1622728 at http://www.wisebread.com I Lost My Tax Documents… Now What? http://www.wisebread.com/i-lost-my-tax-documents-now-what <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/i-lost-my-tax-documents-now-what" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000081177679.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's human to make an error. Unfortunately, the Internal Revenue Service (IRS) isn't so forgiving of tax filers' mistakes, including incomplete forms and missing documents. For example, forgetting to include your taxpayer identifying number, such as your Social Security number, costs you <a href="https://www.irs.gov/pub/irs-pdf/n746.pdf">$5 each time</a> it's missing from required returns and statements.</p> <p>Even heftier fees apply when you forget to include necessary tax documents with your filing. Are you missing documents or other needed information for your upcoming taxes? Here is what you can do to fix this before the filing deadline comes in April 2016.</p> <h2>1. Prior-Year Tax Information From the IRS</h2> <p>You can request current and the past six years <a href="https://www.irs.gov/uac/How-to-Get-Your-Prior-Year-Tax-Information-from-the-IRS-1">tax return transcripts</a> and tax account transcripts from the IRS.</p> <p>While a tax return transcript shows most line items, including accompanying forms and schedules that were originally filed, it will not include changes made afterward. To request an updated return that includes those changes, you need to request a tax account transcript.</p> <p>To request tax return or tax account transcripts, you can:</p> <ul> <li>Call 1-800-908-9946;</li> <li>Use the IRS's online tool &quot;<a href="https://www.irs.gov/Individuals/Get-Transcript">Order a Transcript</a>;&quot; or</li> <li>Request a transcript by mail or fax using the appropriate form (<a href="https://www.irs.gov/pub/irs-pdf/f4506.pdf">4506</a>, <a href="https://www.irs.gov/pub/irs-pdf/f4506t.pdf">4506T</a>, or <a href="https://www.irs.gov/pub/irs-pdf/f4506tez.pdf">4506T-EZ</a>).</li> </ul> <p>The IRS doesn't charge a fee for transcripts that are up to three years old. However, the IRS does charge $57 for every actual copy (different from a transcript) of a previously processed tax return. Actual copies are generally available for the past six years. Victims of a zone declared as a federal disaster by the President may have this fee waived.</p> <h2>2. Forms 1099 for Interest and Dividend Income</h2> <p>You can retrieve missing forms <a href="https://www.irs.gov/uac/Form-1099-INT,-Interest-Income">1099-INT, Interest Income</a> and <a href="https://www.irs.gov/uac/Form-1099-DIV,-Dividends-and-Distributions">1099-DIV, Dividends and Distributions</a> by requesting them from the bank or financial institution that issued them.</p> <p>The deadline for most forms 1099 is January 31st, so if you haven't received them by that date, you may need to wait a couple more days. Remember that you don't usually need to attach these forms to your return. As long as you can retrieve the necessary information from the financial institution, you can put together your return. For example, some financial institutions may offer you a summary or key data from those forms in an online portal.</p> <h2>3. Forms 1099 for Miscellaneous Income</h2> <p>Another very important form from the 1099 family is the <a href="https://www.irs.gov/uac/About-Form-1099MISC">1099-MISC, Miscellaneous Income</a>. This is a key form for sole proprietors, freelancers, and independent contractors, who receive most of their income from clients or part-time employers rather than full-time employers.</p> <p>If you receive at least $600 as payment from a single individual or company within a year, you need to have a Form 1099-MISC from that individual or company. While you don't need to attach those forms to your return, they would be essential in case of an IRS audit. Users of Schedule C to itemize deductions are almost three times more likely than a corporation to receive an audit. The IRS would slap a 25% inaccuracy penalty on top of applicable taxes and interest to wrongdoers. (See also: <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make?ref=seealso">8 Tax Return Mistakes Even Smart People Make</a>)</p> <p>Add up your invoices or paystubs from everyone that you have received a payment from and, if that total adds up to $600 or more, double check that you have a Form 1099-MISC. If you don't have one, request one from that individual or institution.</p> <h2>4. Receipts for Donations</h2> <p>Cash and non-cash donations are some the most common ways to reduce your taxable income. Depending on the size of your donation, you may be off the hook to provide documentation. If your cash or non-cash donation is less than $250, a paper or printout of an online statement can suffice as proof of your donation.</p> <p>However, for <a href="https://www.irs.gov/taxtopics/tc506.html">donations greater than $250</a> you need to get a written contemporaneous acknowledgment for each one of them. For non-cash donations worth $5,000 or more, you'll also need a qualified appraisal of the items.</p> <p>Some qualified nonprofit organizations accepting cash donations provide updates on your donations on a rolling basis, so you may receive one in the mail without doing anything. In most cases, you need to contact the recipient of your donation to request a total if you're unsure of how much you have donated for the year.</p> <p>Organizations, such as Goodwill, that accept non-cash donations generally don't replace receipts when those documents are lost lost or stolen. If the market value of the donated items is less than $500, you should be fine under most circumstances by itemizing the items in the appropriate schedule.</p> <p>A best tax practice is to keep a digital copy of your donation receipts in case you misplace them.</p> <h2>5. W-2s</h2> <p>It's possible to get past (up to six years) and current copies of your <a href="https://www.irs.gov/uac/About-Form-W2">Form W-2, Wage and Tax Statement</a> directly from the IRS following the directions outlined above. However, it takes the IRS five to 10 days to fulfill online requests and up to 30 calendar days to fulfill requests via fax or mail.</p> <p>For some taxpayers, all that they need to file a <a href="https://www.irs.gov/pub/irs-prior/f1040ez--2014.pdf">1040-EZ return</a> are their W-2 forms. When you're so close to the April 15 deadline, waiting more than a day may not be an option. In those circumstances, check directly with your HR department about a missing W-2. Most employers are able to provide you a replacement faster than the IRS, and some of them even offer retrieval directly from an online portal, such as Workday, UltiPro, or BambooHR.</p> <h2>What If I Can't Get Any of My Tax Documents on Time?</h2> <p>To buy yourself some extra time, you can <a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know?">file an extension</a> by April 15th. This would extend your filing deadline until October 15th. Remember that you're still liable for the applicable late filing penalty if you owe taxes (5% of the amount due for each month or part of the month your return is late).</p> <p>In 2016, tax-filing procrastinators have some good news, because most taxpayers will have until <a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Monday April 18, 2016</a> to file federal taxes. Residents of Maine and Massachusetts are extra lucky and have until Tuesday April 19, 2016 to complete their returns.</p> <p>Still, don't wait until the last day and gather those missing tax documents as soon as possible.</p> <p><em>How did you deal with the loss of tax documents?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/i-lost-my-tax-documents-now-what">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Here&#039;s How to Deduct Charitable Donations on Your Taxes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cant-pay-your-taxes-heres-what-to-do">Can&#039;t Pay Your Taxes? Here&#039;s What to Do</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes forms Help IRS lost documents transcripts Wed, 16 Dec 2015 18:00:10 +0000 Damian Davila 1619695 at http://www.wisebread.com Avoid the Tax Season Rush With These Early Prep Steps http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/avoid-the-tax-season-rush-with-these-early-prep-steps" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/smart_tax_planning_000059197820_0.jpg" alt="How to prep for tax season now" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's almost the holidays, which is fun! But that also means it's almost tax season &mdash; decidedly less fun. <a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Filing in 2016</a> might be tricky for some people, so here's how to prep now, and avoid the headache later.</p> <h2>How to Organize Your Documents</h2> <p>Make sure your <a href="http://www.wisebread.com/tax-document-checklist-what-to-gather-before-doing-your-taxes">basic tax documents</a> are ready to go.</p> <h3>1. W-2 Workers</h3> <p>Thankfully, these filings are the easiest. The most important item to save is your W-2 (most employers will mail them out between late December and February). Since you get a standard deduction of $5,000, it's unlikely that you need to keep any of your expenses. However, if your work-related expenses exceeded $5,000 in 2015, add them up and have all your receipts ready.</p> <h3>2. The Forgotten W-4</h3> <p>Do you routinely get huge tax refunds? If so, it's probably because you are withholding too much of your income. You can always fill out a new W-4 to change your tax withholding. Ask your human resources office for a form and for help, if you need it. When in doubt, ask your accountant how much you should be withholding from each paycheck, or visit the <a href="https://www.irs.gov/Individuals/IRS-Withholding-Calculator">IRS withholding calculator</a>. (Sorry, the answer is not &quot;zero!&quot;)</p> <h3>3. The Endless Sea of 1099s</h3> <p>Are you a freelance or contract worker hounding your employers for 1099s? Remember that you don't have to! Just report the income. The IRS won't penalize you for reporting more income than there are 1099s, but they will penalize you for having earned more money than you reported, should that be revealed. Asking your employer(s) for copies of said 1099s can also cause errors at the IRS, leading them to double what you actually earned.</p> <p>Also, be ahead of the dreaded 15% self-employment tax. Prepare your savings for tax season all year 'round. But if you haven't been, catch up now by saving 20% of your 1099 income between now and April. That should be enough to pay your tax preparer, the IRS, and have a little left in your savings to get the ball rolling for next year.</p> <h2>Things You Can Do to Lower Taxable Income</h2> <p>There are plenty of low-effort things you can to trim down your taxable income total, but also help you in the long run, including:</p> <h3>4. Make Charitable Donations By Year End</h3> <p>Some great charities include: The Boys &amp; Girls Club, PBS, The Heifer Project, or nearly anything on <a href="http://www.donorschoose.org/">DonorsChoose.org</a>.</p> <h3>5. Increase Retirement Deferrals</h3> <p>Up your 401K or IRA from the standard vestment to 10%&ndash;15% for a few months. That'll be taken from your income before taxes.</p> <h3>6. Add Deductions Sooner Rather Than Later</h3> <p>This will help avoid lost or forgotten expenses. Flag the charges on your bank statements the second you realize they're business or work expenses. Remember to include job hunting expenses and any home appliances you also use for work.</p> <h3>7. Have Kids? Consider Opening a 529 Account</h3> <p>Get a start on saving for college. You'll receive a tax subsidy, and in some states, you can get a tax credit or deduction for your contributions to a 529 account.</p> <h3>8. Claim Part of Your Rent or Mortgage as a Home Office</h3> <p>Do you work from home? If so, you can claim up to 25% of you rent or mortgage payment as a home office. Ask your accountant to add that to your deductions.</p> <h2>Avoid IRS Penalties</h2> <p>You think you're doing everything right, and then you get slapped with a <a href="http://www.wisebread.com/avoid-irs-penalties-with-this-simple-estimated-payment-strategy">tax penalty</a>, or worse, an audit. Play by the rules to sidestep hazards.</p> <h3>9. Don't Omit Any Income</h3> <p>Always report income, whether it's inheritance, an unsent 1099, or any other source. It's never illegal to over-report, but it's definitely illegal to under-report! Be sure you beef up your deductions to make up for the income and you'll be fine.</p> <h3>10. Make Sure You're Signed Up for Health Care</h3> <p>The Affordable Care Act means healthcare within reach for everyone, but it also means you need to do your due diligence and sign up for health care or you will <a href="http://www.wisebread.com/going-without-health-insurance-in-2015-heres-what-itll-cost-you">face more taxes</a>. This can be hard for the millions of people who have been without health care for most of their adult lives, but it's <a href="http://www.wisebread.com/how-to-take-advantage-of-obamacare-for-less-financial-risk-and-more-freedom">actually not difficult</a>.</p> <h3>11. Make Your Appointment Early</h3> <p>Got a good accountant or tax preparer? Chances are s/he is also a very popular accountant. Get an appointment on the books as soon as possible. Not only does this mean you won't get pinged for a late tax filing, but having the appointment set in stone will force you to get organized faster.</p> <p><em>How are you getting ready for tax season?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-meadows">Amanda Meadows</a> of <a href="http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Here&#039;s How to Deduct Charitable Donations on Your Taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes 1099 deductions IRS savings W2 year end Tue, 17 Nov 2015 14:15:18 +0000 Amanda Meadows 1613391 at http://www.wisebread.com 7 Penalty-Free Ways to Withdraw Money From Your Retirement Account http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/ira_401k_000006195210.jpg" alt="Learning ways to withdraw from your 401k without penalty" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While it's true that 401Ks have a higher contribution limit ($18,000 in 2015) than traditional IRAs and Roth IRAs ($5,500 for most people or $6,500 if you're age 50 or older in 2015), it would be a mistake to dismiss traditional IRAs and Roth IRAs as part of your retirement strategy.</p> <p>One of the major advantages of having an IRA is that it offers much more flexibility when it comes to taking distributions before age 59 1/2. Under most circumstances, early distributions from a 401K trigger a 10% penalty fee from the IRS on top of applicable income and capital gains taxes. But IRAs are subject to far fewer limitations in many cases &mdash; often, they're free from the 10% penalty for early withdrawals.</p> <p>Here are seven circumstances under which you can withdraw money before age 59 1/2 from an IRA without triggering an IRS penalty.</p> <h2>1. Health Insurance Premiums During Unemployment</h2> <p>If you're unemployed and can't jump on somebody's health plan for coverage, you're probably going to be stressed out about meeting your monthly premiums. Fortunately, once you've been unemployed for at least 12 continuous weeks, the IRS lets you take a penalty-free early distribution from your IRA to cover your health insurance monthly premiums. (To avoid any doubts about how you're using your IRA monies, consider opening a new bank account to handle deposits from your IRA and payments to your health provider.)</p> <p>Some additional points to remember are that the IRA distributions need to take place during either the year you received the unemployment compensation or the following, and that the IRA distributions need to take place no later than 60 days after you have been reemployed.</p> <h2>2. Large Medical Bills</h2> <p>Uncle Sam also gives you a break when you use an IRA withdrawal to pay for unreimbursed medical expenses greater than 10% (or 7.5% if you or your spouse was born before January 2, 1950) of your adjusted gross income for the year of the distribution.</p> <p>While the IRS doesn't require you to itemize your deductions to take advantage of this exception, you should keep a record of all of your medical, dental, and prescription expenses that weren't reimbursed or paid by others. Remember that you can't include the cost of non-prescription drugs (except insulin) or other purchases for general health, such as vitamins, diet foods, or health club dues. Costs of cosmetic procedures aren't eligible, either.</p> <p>However, you can include 23.5 cents per mile that you drove your car for medical reasons. Refer to the Schedule A of Form 1040 to find out the entire list of eligible expenses that you can use to calculate your total unreimbursed medical expenses.</p> <h2>3. First Home Purchases</h2> <p>If the dream property for which you've been waiting so long finally becomes available and you're up to $10,000 short on the down payment, you can tap into your IRA without a penalty.</p> <p>As long as your total IRA withdrawal for first-time home buying is not greater than $10,000, you can even split your withdrawals over more than one year. Not only can you use these monies to buy your own home, but also to pay qualified costs of buying, building, or rebuilding a property. Just make sure that those qualified costs are paid within 120 days after receiving your IRA distribution.</p> <p>Attention couples: If you keep separate IRA plans, each one of you can withdraw up to $10,000 without penalty to pool at total of $20,000 for a first home purchase.</p> <h2>4. Higher Education Expenses</h2> <p>Whether it is for your own education or that of your spouse, children, or grandchildren, you can take a penalty-free withdrawal from your IRA to cover qualified higher education expenses, including tuition, fees, books, supplies, and equipment required for the enrollment or attendance at an eligible educational institution.</p> <p>Other eligible education expenses include the cost of room and board for individuals that are at least half-time students and special needs services in connection with enrollment or attendance. While there is no limit to the amount of your withdrawal free from the 10% penalty tax, keep in mind that your monies may count as income for the student, and may thus impact their eligibility for financial aid.</p> <h2>5. Debts to the IRS</h2> <p>Uncle Sam wants so badly to collect on your unpaid taxes and arrears that he's willing to forego the 10% penalty tax on your IRA withdrawal. However, as in all other scenarios in this list, you do have to pay applicable income taxes, including capital gains.</p> <p>While using part of your IRA balance to pay all or part of your tax debts may not sound that great, it's better than trying to avoid a levy. Under the second scenario, you may have no bargaining power.</p> <h2>6. Rollovers From Traditional IRAs to Roth IRAs</h2> <p>Unlike traditional IRAs, Roth IRAs are funded with after-tax dollars. This means that you don't owe any taxes on withdrawals after age 59 1/2. Plus, once your Roth IRA has been open for at least five years, you can withdraw your contributions at any time without penalty (note that earnings on your contributions <em>are</em> subject to IRS penalties).</p> <p>If you were to transfer funds from your traditional IRA to a Roth IRA, you would pay applicable income taxes now, but no 10% penalty tax on contributions if you wait five years to withdraw those funds from your Roth IRA. Each transfer has its own five-year waiting period and you can only do one IRA rollover per year.</p> <h2>7. Periodic Income Distributions</h2> <p>Last but not least, you can take penalty-free distributions from your IRA by taking a series of substantially equal periodic payments (SEPP) over your life expectancy or the life expectancies of you and your designated beneficiary. The IRS website offers a useful list of frequently asked questions on <a href="http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments">setting up a SEPP plan</a>.</p> <p>If you're planning to set up a SEPP for early retirement, remember that there maybe some financial risks involved. So, before taking your first periodic income distribution, consult your accountant or financial advisor to check your calculations. (See also: <a href="http://www.wisebread.com/4-reasons-early-retirement-might-be-financially-risky?ref=seealso">4 Reasons Early Retirement Might Be Financially Risky</a>)</p> <h2>The Bottom Line</h2> <p>Taking an early distribution of your IRA may be a last resort to make your financial goals, such as a first home purchase, happen. As you can see from these seven examples, there are ways for you to take an early withdrawal from an IRA without the 10% tax penalty. While these strategies may not be for everybody, some of them can be true game changers. Consult IRS Publication 590-B for more details.</p> <p><em>Have you used your IRA to take early withdrawals without a penalty? Share with us how you did in the comments section.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stop-making-these-10-bogus-retirement-savings-excuses">Stop Making These 10 Bogus Retirement Savings Excuses</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">5 Important Things to Know About Your 401K and IRA in 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-why-a-roth-ira-may-be-better-than-your-401k">4 Reasons Why a Roth IRA May be Better Than Your 401(k)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes 401k borrowing health insurance home buying IRA medical bills penalties sepp Thu, 05 Nov 2015 13:15:18 +0000 Damian Davila 1605093 at http://www.wisebread.com Winter Is Coming: Make These 6 Money Moves Now http://www.wisebread.com/winter-is-coming-make-these-6-money-moves-now <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/winter-is-coming-make-these-6-money-moves-now" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/fall_piggy_bank_000027613114.jpg" alt="Learning which money moves to make before winter comes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As we approach the end of the year, it's important to make sure that your money is headed in a good direction. It's all too easy to put your finances on autopilot and not think twice about the money moves you're making. But a completely hands-off approach can be a recipe for disaster. Here are six money items to tackle this fall.</p> <h2>1. Health Insurance Open Enrollment</h2> <p>Having health insurance is no longer an option. In fact, the fine for <a href="http://www.wisebread.com/avoid-these-5-costly-health-insurance-mistakes">not having health insurance</a> goes through the roof in 2016. In 2016, you'll pay the higher of either 2.5% of your yearly household income or $695 per person if you fail to have a health insurance policy that meets the government's definition of <a href="https://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Minimum-Essential-Coverage">minimum essential coverage</a>. That's a hefty chunk of change.</p> <p>Open enrollment starts on November 1, 2015 and only runs until January 31, 2016. You only have during that window to make changes to your health care plan unless you fall under a special exception, such as marriage, giving birth, or losing coverage at work. Don't get lazy though; you only have 60 days after one of those events to get insurance coverage. If you don't, you'll need to wait until the next open enrollment.</p> <h2>2. End of Year IRA Contributions</h2> <p>Contributing to your IRA, whether it's a traditional or a Roth plan, can be an important component of your retirement plan. And the sooner you start, the more money you can accumulate over your lifetime. Don't forget that you can make your IRA contributions for 2015 all the way up to the April 15, 2016 tax filing deadline.While traditional IRA contributions may qualify for tax deductions, Roth contributions generally do not. Tax deduction or not, contributing to your IRA is simply a smart financial move.</p> <h2>3. It's Bonus Time</h2> <p>The end of the year means that bonuses are right around the corner. Do you have a plan for your bonus? Maybe a trip somewhere amazing, or buying that new iPhone 6? Why not plan on using all or some of your bonus to help further your financial goals, either by paying off debt or saving and investing? Also, remember that your bonus is often based upon your performance, so now is the time to step up your game and talk with your boss about how you might maximize your check.</p> <h2>4. Create a Money Filing System</h2> <p>Before the end of the year, it's a good idea to get a money filing system in order to keep track of all your important documents, tax information, and all those other loose financial papers that need a home. Keep at least your last two years tax returns, any insurance documents and policies, and if you are self-employed, all those receipts that you will need for tax time. Whether you use a service like Dropbox, a password secured vendor, or even an old school accordion file at home, make sure your filing system is secure and easy to access.</p> <h2>5. Entrepreneur Taxes</h2> <p>When you're an entrepreneur, you've got to think a little differently about the end of the year. For you, the end of the year is a good time to make an inventory&nbsp;of all the tax deductible purchases needed for your business. On your list, you might include things like computers, phones, software, equipment, books, and new marketing systems. Always make sure you save the receipt, and buy the items before December 31, 2015 to count toward this year's deductions.</p> <h2>6. Donate</h2> <p>Donating toward the greater good can be a terrific feeling, but there are a few rules you need to follow if you are going to deduct the expense as part of your 2015 taxes. If you choose to make a monetary donation, you must ensure that you are giving to a proper non-profit 501(c) (3) organization, and you must have some sort of bank record, cancelled check, or receipt for your donation.</p> <p>If you choose to use a credit card to donate, make sure you donate before December 31, 2015. If your credit card bill isn't paid until January 2016, but you made the donation in 2015, it still counts for this year. If you plan to donate clothing or household items, they generally must be in good shape. Organizations like Goodwill will always ask you for the approximate value (known as fair market value) of your donations. Just be aware that if you donate over $500 of goods or clothing, you will need an appraisal of the value regardless of whether the items are in good shape or not.</p> <p><em>What are you doing to prepare your finances for winter?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/shannah-game">Shannah Game</a> of <a href="http://www.wisebread.com/winter-is-coming-make-these-6-money-moves-now">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-year-end-financial-moves-you-must-make-now">10 Year-End Financial Moves You Must Make Now</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/bar-stool-economics-0">Bar Stool Economics</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes autumn donating fall health insurance money moves taxes Wed, 04 Nov 2015 13:16:21 +0000 Shannah Game 1605064 at http://www.wisebread.com 5 Signs You Probably Need an Accountant http://www.wisebread.com/5-signs-you-probably-need-an-accountant <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-signs-you-probably-need-an-accountant" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000021395191.jpg" alt="Woman learning she probably needs an accountant" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you dread filing your income taxes each year? Does preparing your taxes take weeks of your time? And once you've sent your papers to the IRS, do you have the sneaking suspicion that you might not have taken all the deductions to which you are entitled?</p> <p>You might need to hire an accountant.</p> <p>&quot;Hiring an accountant depends on whether your knowledge, time, and money are best spent on bookkeeping, loan application, and tax preparation, or whether you have higher priorities,&quot; says Valrie Chambers, associate professor of taxation and accounting at Stetson University in Celebration, Florida. &quot;A business owner who excels at sales should probably use her time increasing sales rather than learning and doing accounting. That strategy is just more profitable for the business.&quot;</p> <p>Here are five signs that you need to hire an accountant.</p> <h2>1. You Owe the Government a Lot of Money Each Year</h2> <p>Taxes become complicated when you work for yourself or run your own business. Depending upon how much you earn, you'll have to pay estimated quarterly tax payments four times every calendar year &mdash; January 15, April 15, June 15, and September 15. These payments are supposed to guarantee that you won't owe the federal and state governments thousands of dollars each year in taxes.</p> <p>But if you find that when you file your income taxes each April 15 you do owe the state and federal government $3,000, $4,000, $6,000, or more, you're doing something wrong. An accountant can help you determine the quarterly tax payments you should be making to ensure that you're not hit with a huge tax bill every April 15.</p> <h2>2. You're Worried That You're Missing Big Deductions</h2> <p>Yes, hiring an accountant takes money. But doing so can also <em>save </em>you money. An accountant can prepare your annual income tax returns to make sure that you're not missing out on any important deductions for your household or your business. Missed deductions can cost you thousands of dollars each year in taxes.</p> <h2>3. It Takes You Days to Complete Your Taxes</h2> <p>Filing your <a href="http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use">income taxes</a> isn't necessarily easy. But it shouldn't be a draining chore, either. If your life has gotten complicated &mdash; maybe you've started your own consulting business on the side, perhaps you've adopted and are struggling to understand how the adoption tax credit works, maybe you're not sure how to deduct the bills for a serious medical procedure &mdash; you can bet that your income taxes have, too.</p> <p>If it is taking you a full week to complete your taxes, it might be time to think about hiring an accountant. You just have to determine how important your time is: Would you rather spend your time earning more money or poring over your tax forms?</p> <h2>4. You Own Rental Real Estate</h2> <p>Renting an apartment or two is a great way to earn passive income. But doing so can also complicate your finances. That's why it makes sense to hire an accountant to make sure that you don't miss any important tax deductions related to rental income, and that you file all the paperwork necessary when working as a landlord.</p> <p>&quot;There comes a point when personal tax software is not sophisticated enough to take into account the complexities of real estate investments,&quot; says David Reiss, professor of law and research director for the Center for Urban Business Entrepreneurship at Brooklyn Law School in New York City. &quot;If a taxpayer has multiple properties that have both a personal and investment component, tax software may not be able to accept all of the relevant inputs and generate the correct output.&quot;</p> <h2>5. You've Never Been Able to Balance Your Checkbook</h2> <p>If you're struggled for years to balance your own checkbook &mdash; if overdraft charges from your bank aren't a rare enough occurrence &mdash; it might be time to invest in an accountant, especially if you've started your own business. It's bad enough to struggle with your personal finances, and you don't want to operate a business that doesn't have its books balanced.</p> <p>Chambers recommends that you meet with several accountants &mdash; she recommends that you only work with Certified Public Accountants (CPAs) &mdash; before hiring one. Ask accountants how long they've been in business, whether they've worked with clients at your income level, how much they charge, and what services they'll provide. Ask, too, for referrals from accountants' current clients.</p> <p>&quot;Meet with the CPA to see if you are comfortable sharing your information with this firm,&quot; Chambers says. &quot;CPAs should be forthcoming about their fees. When they are hired, they normally spell out what they will do for those fees in an engagement letter. Finding an accountant who is right for you is part research, part comfort level.&quot;</p> <p><em>When did you realize that you needed an accountant?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps">Avoid the Tax Season Rush With These Early Prep Steps</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Here&#039;s How to Deduct Charitable Donations on Your Taxes</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes accountants cpas deductions finance income taxes IRS self-employment Tue, 13 Oct 2015 13:00:32 +0000 Dan Rafter 1586108 at http://www.wisebread.com 3 Unbelievable Real Estate Tax Shelters of the Rich http://www.wisebread.com/3-unbelievable-real-estate-tax-shelters-of-the-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-unbelievable-real-estate-tax-shelters-of-the-rich" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000019372518.jpg" alt="Learning real estate tax shelters of the rich" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's no secret that the rich often take <a href="http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use">advantage of tax shelters</a> and loopholes to minimize their expenses. But some tax loopholes offer a shocking advantage to those who have enough money to exploit them. Here are a few of our favorites.</p> <h2>Investments in Rural Land</h2> <p>Why go small when you can go big? If you can afford it, buy a few acres of rural land. All except one of the 50 states have what's called &quot;use-value assessment,&quot; which allows land-buyers to purchase land and sell it at its assessed &quot;use-value&quot; rather than the fair market value, as with other types of real estate &mdash; as long as you comply with a few minor guidelines.</p> <p>The IRS provision was originally created to help farmers hold on to their land. But according to <em>The Nation</em>, the rich are <a href="http://www.thenation.com/article/tax-day-farms-owned-rich-provide-massive-tax-shelter/">using it as a tax shelter</a>. In 2011, Michael Dell reportedly qualified his $71.4 million 1,757-acre Texas ranch for the tax credit and brought its assessed value to $290,000. They say it takes money to make money, but that kind of tax savings seems more than a bit excessive.</p> <h2>1031 Exchanges</h2> <p>The rich can often offset real estate capital gains or losses with a 1031 Exchange. Section 1031 of the Internal Revenue Code is a provision that allows real estate investors to sell property, take a profit, and defer capital gains or losses as long as the proceeds are reinvested in similar use property.</p> <p>Not all real estate transactions qualify for 1031s. In order to receive this special tax treatment, the property must be used for trade, business, or investment purposes. Most investors use 1031s to build long-term tax-deferred wealth. There is no limit on the number of 1031 Exchanges you can do. As an example, an investor buys Building A for $300,000. He turns around and sells it for $450,000. That's a profit of $150,000. At the time of the sale, he will owe taxes on the profit. But, if he were to do a 1031 Exchange, he can take the entire $450,000 and invest it in much more expensive Building B, without paying tax. He can again repeat this process for the purchase of Buildings C, D, E, and so on.</p> <h2>Dynasty Trusts</h2> <p>Dynasty Trusts are a form of irrevocable trust used by wealthy families to create generational wealth. With properly formed trusts, your descendants remain exempt from estate, gift, and generation-skipping (GST) tax for the life of the trust.</p> <p>There are two ways to fund the trust &mdash; while you're alive, or upon your death. In either case, your assets, such as real estate property, stocks, bonds, life insurance, etc. are placed within the trust and protected by its provisions. The trust allows your assets to grow exponentially and into infinity in most cases, but are subject to income and capital gains tax either while you're alive or at your death, unless the trust is created in a state that does not impose these taxes &mdash; such as Texas, Nevada, or Florida, for example. That's where the possibility of huge tax savings occurs.</p> <p>Individual states have their own rules governing Dynasty Trusts. If you're interested in transferring real estate and other assets to a trust, please be advised that these are complicated agreements and you should seek the services of an estate planning attorney.</p> <p>If purchasing 10 acres of rural land, 1031 Exchanges, and Dynasty Trusts are not in your immediate pathway to wealth, but perhaps homeownership and real estate investing are. And as you're on your journey, remember these real estate tax shelters of the wealthy &mdash; you might need them someday.</p> <p><em>Would you take advantage of these tax ruses if you could?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/3-unbelievable-real-estate-tax-shelters-of-the-rich">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-7"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-10-real-estate-tax-write-offs">Top 10 Real Estate Tax Write-Offs</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Taxes 1031 exchanges deductions dynasty trusts rich people rural land tax shelters wealth Thu, 08 Oct 2015 13:00:42 +0000 Qiana Chavaia 1580007 at http://www.wisebread.com Avoid IRS Penalties With This Simple Estimated Payment Strategy http://www.wisebread.com/avoid-irs-penalties-with-this-simple-estimated-payment-strategy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/avoid-irs-penalties-with-this-simple-estimated-payment-strategy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_doing_taxes_000018891609.jpg" alt="Man saving money by paying estimated tax payments" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As an employee, your employer withholds taxes from every paycheck for the IRS. But, what happens when you're self-employed? If you are self-employed or have income aside from your salary, then you may want to pay estimated taxes every quarter.</p> <p>The IRS wants you to <a href="http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use">pay your income taxes</a> as you earn money, which is why they require quarterly payments. And you might even save some money by doing so. Still, many people file yearly, instead, and pay a penalty. Consider the following eight key facts you should understand before deciding on which schedule to pay.</p> <h2>1. Understand the Underpayment Penalty</h2> <p>If you've underpaid taxes as of the annual April 15 filing date, then you may have to pay a penalty for underpayment. The penalty is imposed on the amount you owe for the number of days it remains unpaid. You can expect a steep penalty of an annualized 4% as long as your payment is late. For example, if you owe $10,000, you can expect an annualized underpayment penalty of $400. The longer it takes for you to pay off the debt, the more the fees will accrue. This may seem like a hefty fine for some people, but others prefer to take the penalty so that they don't need to worry about making estimated tax payments every quarter.</p> <p>Keep in mind that it's very important you pay each quarterly payment by the due date. You can easily pay online, over the phone, through direct transfer, with a debit or credit card, or by using a check or money order.</p> <h2>2. Is the Penalty Worth It?</h2> <p>Most people agree that paying the penalty simply isn't worth it. While you can put off all your payments until April 15th, avoiding your estimated tax payments will rack up more in penalties then you could likely make by placing the money in a savings account. Paying hundreds of dollars for a penalty that can be easily avoided will probably just hurt you in the end.</p> <h2>3. Calculate Your Estimated Tax Payments</h2> <p>The IRS requires that you pay at least 90% of your taxes during the year, which can be difficult to calculate precisely. For a quick way to calculate your payments, pay at least 100% of the taxes owed on your previous year's return, split into four quarters. If your adjusted gross income is over $150,000, you will need to pay at least 110% of the tax you owed for last year's filing.</p> <p>Some services, like <a href="https://turbotax.intuit.com/">TurboTax</a>, will help you calculate how much you should pay each quarter, or you can complete <a href="http://www.irs.gov/pub/irs-pdf/f1040es.pdf">Form 1040-ES</a>. However, you will not necessarily pay the same amount every quarter. For instance, if you make a lot of money in one quarter, you will want to pay more on that quarter's estimated tax payment. If you think you may have underpaid and don't want to be subjected to the penalty, complete <a href="http://www.irs.gov/pub/irs-pdf/f2210.pdf">Form 2210</a> to determine if you will owe a penalty.</p> <h2>4. Know the Payment Due Dates</h2> <p>You will need to make payments four times a year, in the following intervals:</p> <ul> <li>Quarter 1: January 1 &ndash; March 31, Payment due 04/15<br /> &nbsp;</li> <li>Quarter 2: April 1 &ndash; May 31, Payment due 06/15<br /> &nbsp;</li> <li>Quarter 3: June 1 &ndash; August 31, Payment due 09/15<br /> &nbsp;</li> <li>Quarter 4: September 1 &ndash; December 31, Payment due 01/15</li> </ul> <h2>5. Additional Income Received</h2> <p>Most often, estimated tax payments are something self-employed workers need to worry about. However, you may also owe estimated taxes if you receive additional income, such as the following:</p> <ul> <li>interest,</li> <li>dividends,</li> <li>gains from sales of stock,</li> <li>business earnings,</li> <li>alimony.</li> </ul> <h2>6. Exceptions to the Rule</h2> <p>There are some exceptions when it comes to making quarterly payments. If any of the following apply to you, then you don't need to worry about estimated tax payments.</p> <ul> <li>You expect to owe less than $1,000 in taxes for the tax year.<br /> &nbsp;</li> <li>You expect your federal income tax withholding to account for at least 90% of the tax you will owe for this tax year.<br /> &nbsp;</li> <li>You expect your income tax withholding to be at least 100% of the tax from last year's return.</li> </ul> <h2>7. Apply Your Refund</h2> <p>If you receive a tax refund this year, consider applying it towards your quarterly estimated tax payments. This will help you to get a head start and allow you to pay less during the coming year.</p> <h2>8. Tax Installment Agreements</h2> <p>If you simply cannot afford to make the estimated tax payments, and are not able to pay your tax debt upfront, then you may want to consider tax installment agreements. This will allow you to set up a monthly payment plan with the IRS for the amount owed and you will have up to 72 months to pay the debt. While this will provide you more time, keep in mind that there is a fee to set this arrangement up and you will continue to accrue penalties and interest for as long as you're paying off your tax debt.</p> <p>If you're still unsure about what you owe and whether you should make the quarterly payments, refer to the IRS for more <a href="http://www.irs.gov/Businesses/Small-Businesses-&amp;-Self-Employed/Estimated-Taxes">information on estimated taxes</a>.</p> <p><em>Do you pay your taxes in installments?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/avoid-irs-penalties-with-this-simple-estimated-payment-strategy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-sep-ira-is-how-the-self-employed-do-retirement-like-a-boss">The SEP-IRA Is How the Self-Employed Do Retirement Like a BOSS</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-penalty-free-ways-to-withdraw-money-from-your-retirement-account">7 Penalty-Free Ways to Withdraw Money From Your Retirement Account</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/five-easy-steps-to-keeping-track-of-expenses-for-the-self-employed">Five Easy Steps to Keeping Track of Expenses for the Self-Employed</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-signs-you-probably-need-an-accountant">5 Signs You Probably Need an Accountant</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes freelancers paying quarterly penalties self-employment Mon, 10 Aug 2015 13:00:20 +0000 Andrea Cannon 1514201 at http://www.wisebread.com 5 Clever Tax Shelters Anyone Can Use http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-clever-tax-shelters-anyone-can-use" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_gold_piggy_bank_000059335918.jpg" alt="Man finding easy ways to reduce tax burden" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For the middle-class, building wealth for your family can be like constructing a house &mdash; the biggest challenge is setting the foundation. And it starts with keeping your taxes as low as possible. This can sometimes result in relocating to an area where the cost of living and taxes are more affordable, trading high-cost districts in areas like New York City and San Francisco for a more sustainable lifestyle in an area where the job market is strong, like in Houston or Dallas.</p> <p>But there are other smart, easy ways to <a href="http://www.wisebread.com/7-states-with-the-lowest-taxes-for-retirees">reduce your tax burden</a>, too. Read on to familiarize yourself with a few.</p> <h2>1. Avoid Personal and Business Income Tax</h2> <p>You won't have to worry about paying personal state income tax if you live in one of these nine U.S. states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. And you will avoid corporate income tax if you do business in the states of Nevada, South Dakota, Texas, or Wyoming.</p> <h2>2. Take Advantage of Retirement Plans</h2> <p>Most people start saving for retirement once they land their first &quot;real&quot; job by contributing to employer-sponsored plans. Some employers will match as much as 100% of your 401(k) contributions up to 3% of your salary. That's a guaranteed 100% return of your investment! So, let's say you've contributed $3,500 &mdash; your employer will put in another $3,500. There isn't another investment that can guarantee this type of return. Plus, if historical average stock market returns are any indication, your money will likely grow an average 8%&ndash;12% per year tax-free or tax-deferred. Meanwhile, investing in your 401(k) will reduce your annual income and possibly your tax bracket, further reducing your tax burden.</p> <h2>3. Contribute to a 529 College Savings Plan</h2> <p>Qualified Tuition Programs (QTPs), often referred to as 529 Plans, are tax shelters that allow you to save for higher education expenses. In many ways, they resemble retirement plans, offering tax-deferred growth on contributions. Plans vary and have different lifetime contribution limits &mdash; generally around $200,000 &mdash; but there is no federal tax on earnings, and often no state tax if your plan's beneficiary chooses an in-state college.</p> <h2>4. Avoid Estate and Inheritance Tax</h2> <p>The estate and inheritance tax doesn't affect many people, because you're not required to file an estate tax return unless your estate is valued at $5,430,000 or more as of 2015 &mdash; and only six states levy their own inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. And the transfer of property through an estate or inheritance is taxed only in Nebraska and Pennsylvania. Consider yourself lucky &mdash; unless you've got a very sizeable estate, your progeny will probably be spared this tax blow.</p> <h2>5. Buy a Home</h2> <p>When you purchase a home, you can deduct interest paid on your mortgage, a percentage of your real estate taxes and depreciation, and receive credits for certain home improvements. Not a bad deal. But if you're in the business of flipping real estate, it gets even better, because when you sell a property, any profit of under $250,000 (for single tax filers) is tax-free. That amount doubles to $500,000 if you're married and filing jointly. The only requirement the IRS has is that you occupy the home as your principal residence for at least two years before you sell.</p> <p><em>What other easy tax shelters do you employ?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-clever-tax-shelters-anyone-can-use">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-ways-the-government-pays-you-to-live-green">11 Ways the Government Pays You to Live Green</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-the-tax-season-rush-with-these-early-prep-steps">Avoid the Tax Season Rush With These Early Prep Steps</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes charitable donations deductions mortgage retirement tax credits Wed, 05 Aug 2015 13:00:14 +0000 Qiana Chavaia 1508985 at http://www.wisebread.com Top Three Tax Facts to Know for 2016 http://www.wisebread.com/top-three-tax-facts-to-know-for-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/top-three-tax-facts-to-know-for-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/doing_taxes_2015_000013751696.jpg" alt="Woman learning tax facts for 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>2015 is a rough year for taxpayers.</p> <ul> <li>This is the first year the IRS administers the premium tax credits and individual mandates under the Affordable Care Act.<br /> &nbsp;</li> <li>The number of IRS employees assigned to phones <a href="http://www.ibtimes.com/tax-season-2015-irs-cutbacks-cripple-taxpayer-services-poor-elderly-1871896">dropped by 26%</a>, and those employees answer fewer than 40% of calls.<br /> &nbsp;</li> <li>Lucky callers that get to talk to somebody at the IRS only do so after waiting up to 70% longer than five years ago, and can only get answers to the most basic tax questions.<br /> &nbsp;</li> <li>Nina Olson, taxpayer advocate at the IRS, summarized this tax season as a &quot;devastating erosion of taxpayer service&quot; and a &quot;<a href="http://www.taxpayeradvocate.irs.gov/userfiles/file/2014-Annual-Report-to-Congress-Executive-Summary.pdf">sad state of affairs</a>.&quot;</li> </ul> <p>Once this year's tax season is in the books, it's time to get ready for the one next year. To help you determine what's in store, here are three tax facts to know for 2016.</p> <h2>1. More Time to File</h2> <p>About one third of Americans wait until the last minute to file their federal taxes.</p> <p>Those procrastinating tax filers (not you, of course!) will be happy to find that most of them are going to get four extra days to file federal taxes in 2015. There are three reasons for this extension.</p> <ul> <li>2016 is a leap year, so February 29th provides a much needed extra day.<br /> &nbsp;</li> <li>The 154th anniversary of Emancipation Day, when former President Lincoln signed the Compensated Emancipation Act, falls on April 15th in 2016. Made an official public holiday under <a href="https://www.law.cornell.edu/uscode/text/26/7503">Section 7503 of the Tax Code</a> in 2005, Emancipation Day pushes the tax deadline to the next business day.<br /> &nbsp;</li> <li>Since Tax Day and Emancipation Day will be observed on Friday April 15, 2016, the next business day will be Monday April 18, 2016.</li> </ul> <p>Wohoo! Most taxpayers will have until Monday April 18, 2016 to file federal taxes (four extra days).</p> <p>You may be wondering why I keep saying that &quot;most taxpayers&quot; get four extra days. The reason is that some taxpayers will get <em>five </em>extra days.</p> <p>Residents of Maine and Massachusetts will celebrate Patriot's Day (a state holiday commemorating the anniversary of the Battles of Lexington and Concord, the first battles of the American Revolutionary War) on Monday April 18, 2016. The aforementioned Section 7503 of the Tax Code includes in its definition of &quot;legal holiday&quot; any statewide legal holiday in the state where such office is located.</p> <p>So, residents of Maine and Massachusetts have until the closing hours of the postal office on Tuesday April 19, 2016 (five extra days!) to drop their federal tax forms in the mail.</p> <p>Need even more time than that? Then make sure to <a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">file an extension</a> by the deadline.</p> <h2>2. Over 100,000 Compromised Tax Records</h2> <p>Even when you cross the t's and dot the i's in your federal tax forms, something may still go wrong.</p> <p>In May 2015, the IRS announced that &quot;...criminals used taxpayer-specific data acquired from non-IRS sources to <a href="http://www.irs.gov/uac/Newsroom/IRS-Statement-on-the-Get-Transcript-Application">gain unauthorized access</a> to information on approximately 100,000 tax accounts.&quot; Identity thieves got away with Social Security numbers, dates of birth, and street addresses through the <a href="http://www.irs.gov/Individuals/Get-Transcript">IRS Get Transcript</a> online service, which is currently unavailable.</p> <p>Those 100,000 taxpayers affected by the data breach will receive a letter from the IRS officially notifying them of the event and providing recommendations for next steps, such as credit monitoring.</p> <p>However, there's more to this breach.</p> <ul> <li>An estimated additional 100,000 taxpayers will also receive IRS letters in the event that the criminals tried, but were unsuccessful, to <a href="http://www.irs.gov/uac/Written-Testimony-of-Commissioner-Koskinen-on-Unauthorized-Attempts-to-Access-Taxpayer-Data-before-Senate-Finance-Committee">gain access to taxpayer data</a> through the Get Transcript application.<br /> &nbsp;</li> <li>About 13,000 suspect returns were filed for tax year 2014 and their refunds were already sent out.</li> </ul> <p>If you were a victim of identify theft, you may have already received (or will receive) an IRS letter in the near future. This would surely throw a monkey wrench into your 2016 tax filing.</p> <h2>3. Late State Tax Refunds</h2> <p>This 2015 the state tax man cometh late.</p> <p>In response to the increasing number of tax fraud cases around the country, more than one state Department of Taxation is delaying refunds. For example, the Hawaii State Department of Taxation initially told taxpayers it would take six to eight weeks to process submitted tax forms.</p> <ul> <li>By April 2015, new procedures to prevent tax fraud increased the wait period to <a href="http://khon2.com/2015/04/08/state-tax-refunds-delayed-further-by-new-fraud-prevention-procedures/">approximately 10 to 14 weeks</a>.<br /> &nbsp;</li> <li>The Hawaii Department of Taxation updated the processing time to up to 16 weeks on May 6, 2015. Further delays are expected since refunds issued after July 20, 2015 will start receiving interest.<br /> &nbsp;</li> <li>Hawaii taxpayers that file their state taxes online usually get a faster refund. This won't be the case for 2015.</li> </ul> <p>But Hawaii taxpayers aren't the only ones on this boat.</p> <ul> <li>The state Department of Taxation of Colorado has noticed a spike in fraudulent forms, so they had to <a href="http://www.thedenverchannel.com/money/consumer/wheres-my-refund-colorado-tax-refunds-delayed-following-possible-fraud-through-turbotax-software">suspend refunds for 10 days</a>. As a result, many refunds may be still be delayed.<br /> &nbsp;</li> <li>The State of Alabama Department of Revenue saw a rise in the filings of fraudulent state income tax returns using online software services, so they had to implement a <a href="http://revenue.alabama.gov/idquiz/">Taxpayer ID Confirmation Quiz</a>. Some Alabamians are required to take this quiz and, if the fail to complete it, they won't have their refund processed.<br /> &nbsp;</li> <li>The Louisiana Department of Revenue didn't start issuing state income refunds until the last week of February due to an <a href="http://www.thenewsstar.com/story/news/local/2015/03/03/state-begins-issuing-income-tax-refunds/24330635/">increase in tax fraud</a>.</li> </ul> <p>Waiting on your refund, if any, may put a hold on your finances, particularly when you're counting on that refund to make a down payment, pay a big bill, or reduce debt. This is why you need to figure out the appropriate withholding rate (not too big, not too small) so that you don't end up owing the taxman a big check. (See also: <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make?ref=seealso">8 Tax Return Mistakes Even Smart People Make</a>)</p> <p>More days to file federal taxes, letters from the IRS warning some taxpayers about identity theft and tax fraud, and delayed state tax refunds are sure to make 2016 an interesting year.</p> <p><em>What is your forecast for 2016's tax season? Please share in the comments below or tweet us at </em><a href="http://twitter.com/wisebread"><em>@Wisebread</em></a><em>.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-10"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/not-so-fast-5-things-you-must-do-after-filing-taxes">Not So Fast! 5 Things You Must Do After Filing Taxes</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make">8 Tax Return Mistakes Even Smart People Make</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/charitable-giving-get-a-receipt">Charitable giving - get a receipt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-deduct-charitable-donations-on-your-taxes">Here&#039;s How to Deduct Charitable Donations on Your Taxes</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes extensions filing fraud IRS refunds taxpayers Thu, 25 Jun 2015 13:00:12 +0000 Damian Davila 1462317 at http://www.wisebread.com