Taxes http://www.wisebread.com/taxonomy/term/4811/all en-US Don't Miss These 7 Great Tax Deductions for Parents and Caretakers http://www.wisebread.com/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/caretaker_000039736250.jpg" alt="Caretaker discussing tax deductions while at work" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>April 15th will forever be synonymous with an-often dreaded American obligation: filing our income taxes. It can, and often is, a tedious process that we put off for as long as possible. As you wade through a sea of W-2s, 1099s, and deduction paperwork, parents and caretakers should be aware of the following deductions and claim them if and when they apply.</p> <h2>1. Home Modifications</h2> <p>Certain health challenges require home modifications, such as making a bathroom accessible or adding ramps in place of stairs. These expensive modifications can often be deducted from your taxes if without them you wouldn't be able to care for your dependents.</p> <h2>2. Basic Living Expenses</h2> <p>Provided that <a href="http://www.aarp.org/home-family/caregiving/info-02-2013/6-tax-tips-for-family-caregivers.html">basic living expenses</a> such as specialized food, housing, and clothing are medically necessary for your dependents, you may be able to take them as deductions. It's important to note that these expenses are not tax-deductible based on personal preferences. They must be substantiated as required expenses by medical professionals. Make sure that you have paperwork in your files that proves this to be the case in the event that you are audited.</p> <h2>3. Health Care</h2> <p>Once health care costs exceed a certain percentage of your income, it can be taken as a deduction. This includes your own personal health care costs, as well as those of your dependents.</p> <p>If you're caring for a loved one who is ill, these costs can be steep, and you should investigate whether they meet the deduction threshold. This includes out-of-pocket costs for hospitalization, copays, medications, dental care, deductibles, ambulances, bandages, eyeglasses, long-term care costs, alternative medicine, adaptors for TVs and telephones for hearing impairment, smoking cessation, weight loss programs, and wigs that compensate for hair loss. Remember, these costs must be medically necessary or caused by a medical condition, and not just a matter of convenience or preference.</p> <h2>4. In-Home Care for the Disabled</h2> <p>If the care of your loved one requires live-in help or a day- or night-time aide, then the cost of that help may be deductible. It depends upon your income, the cost of the care, and your other dependent care expenses. This credit would be bucketed under the &quot;child and dependent care expenses&quot; deductible. This is a very defined term when it comes to taxes, and there are specific <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Family/Tax-Tips-for-Caring-for-a-Disabled-Spouse/INF27737.html">disability criteria</a> you must meet to take this deduction.</p> <h2>5. Child Care</h2> <p>If your dependent is under 13 years old and you paid for a daycare center, summer camp, or babysitter, a portion of those costs may be deducted on your taxes. There are stipulations around your employment status, the expenses you incur, and how many children you have that dictate if and how much you may <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Family/Deducting-Summer-Camps-and-Daycare-with-the-Child-and-Dependent-Care-Credit/INF22238.html">deduct child care expenses</a>.</p> <h2>6. Student Loan Interest</h2> <p>If you paid interest on the student loans of your dependents, that interest may be tax-deductible. You can take this deduction if your income is below a certain dollar amount, even if you don't itemize your taxes. The IRS provides a complete and thorough explanation of <a href="http://www.irs.gov/publications/p970/ch04.html">student loan interest deductions</a> on its website.</p> <h2>7. Transportation</h2> <p>When you are caring for a loved one, transportation can also be a deductible expense. Like many of the other things listed above, these transportation costs must be medically necessary to serve as deductions.</p> <p>Whenever caregiving is involved, I always encourage people to seek the advice and assistance of a tax professional, such as an accountant. These laws and guidelines are complicated, and in the event that you are audited, it's important to have all of the paperwork to prove and justify these expenses. With the filing deadline less than a month away, now is the time to get everything in order.</p> <p><em>Which deductions for parents or caretakers will you be using?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers">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/get-a-bigger-refund-with-these-often-overlooked-tax-deductions">Get a Bigger Refund With These Often-Overlooked 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/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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</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/tax-deductions-to-start-thinking-about-now">Tax Deductions to Start Thinking About Now</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes caregiving childcare deductions dependents disabled healthcare Thu, 26 Mar 2015 13:00:11 +0000 Christa Avampato 1356049 at http://www.wisebread.com 8 Ways to File Your Taxes for Free in 2015 http://www.wisebread.com/8-ways-to-file-your-taxes-for-free-in-2015 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-ways-to-file-your-taxes-for-free-in-2015" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_taxes_000028462002.jpg" alt="Young couple filing their taxes for free" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you've spent any time in front of the TV procrastinating on your taxes, you've probably seen the &quot;Get your billions back, America&quot; commercial. The problem is that while the companies offering these tax preparation deals are offering you a reduction in price, they're still pocketing some of the savings that could be <em>all yours. </em>Instead, opt to preserve as much of your refund as possible (hopefully all of it!) by finding ways to file your taxes for free. To speed up the process, here are a few <em>truly</em> free ways to pay your dues to the IRS in 2015.</p> <h2>1. Free Software</h2> <p>You'll see a pattern in this post: Many of the free services have an income threshold cap of about $50,000 to $60,000. If you're under the latter bracket, you can in many cases use <a href="http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free">free tax software</a> from <a href="https://turbotax.intuit.com/">TurboTax</a>, <a href="https://www.taxact.com/registration.asp?new=1&amp;type=0&amp;return_type=STD&amp;product_type=1&amp;at=0&amp;l=v1w2x3y2z1&amp;sc=1404263901001cLV&amp;kw=free%20taxact&amp;ad=41140795&amp;dev=c&amp;utm_medium=cpc&amp;src=google&amp;gclid=Cj0KEQjwrPqnBRD56dGe1o_WlZsBEiQAb5ugt8uh7P47SBFhxk9d-YKSkKlmNqPay1OrKnCFyDFZ3CMaAqFR8P8HAQ&amp;mpch=ads&amp;utm_source=google&amp;utm_campaign=1404263901001c&amp;utm_term=free%20taxact">TaxACT</a>, <a href="https://www.taxslayer.com/">TaxSlayer</a>, or <a href="http://www.hrblock.com/lp/fy15/shared-classic.html?otppartnerid=9007&amp;campaignid=ps_mcm_9007_0128&amp;omnisource=GGL%7CCAMP030S-B-Brand+Free+TP-G-Desktop-TP%7CADGP019H+R+Block+Free+File%7CKWRD019h+r+block+free+file&amp;KeywordID=506810411">H&amp;R Block</a>, says financial expert Harrine Freeman. Keep in mind that if your taxes are especially complex, the free versions may not be available (or suitable) for you.</p> <p>I can personally vouch for the efficiency of TurboTax. Right after I graduated from college, I was strapped for cash, and this was the perfect solution. I compiled my forms with ease, and the software walked me through the e-file process.</p> <h2>2. Paper or Online Forms</h2> <p>If you don't want to use software, you can opt for the more traditional method of filing paper forms, or using their online counterparts. <a href="https://www.freefilefillableforms.com/">Free File Fillable Forms</a> provides online versions of the paper federal tax forms.</p> <p>&quot;If you filed last year's taxes with paper forms, the IRS will mail you forms this year,&quot; Freeman says. &quot;The only cost is postage [when returning them].&quot;</p> <p>To order paper tax forms, call 1-800-829-3676 on Mondays through Fridays from 7:00 a.m. to 7:00 p.m.</p> <h2>3. E-File</h2> <p>Perhaps the easiest way to file your returns &mdash; and to do so for free &mdash; is e-filing. You won't have a stack of papers to keep track of, and you won't have to make that dreaded trip to the post office one minute before it closes on April 15. (Although, if you live on the edge like me, you may still be clicking &quot;send&quot; as the clock winds down. Straight-up rebel status.)</p> <p>You can also select direct deposit (so you can get your refund faster) or, if you owe (fingers crossed that you don't), pay your taxes online through the <a href="http://www.irs.gov/Filing/E-File-Options">IRS website</a>.</p> <h2>4. IRS Volunteer Income Tax Assistance</h2> <p>The Volunteer Income Tax Assistance program (VITA) offers free tax help to those who earn less than $53,000 annually, people with disabilities, the elderly, and those who have limited English-speaking ability. IRS-certified volunteers help qualified taxpayers prepare their taxes and file online. Call 1-800-906-9887 for more information.</p> <h2>5. Tax Counseling for the Elderly Programs</h2> <p>Separate from VITA, <a href="http://www.irs.gov/Individuals/Tax-Counseling-for-the-Elderly">Tax Counseling for the Elderly</a> (TCE) is another tax-prep option for folks age 60 and older.</p> <p>&quot;You can also visit an IRS volunteer at a self-assistance service site to get free tax preparation,&quot; Freeman advises. &quot;Visit the IRS website to find a facilitated self-assistance site.&quot;</p> <p>To locate a facility near you or schedule an appointment, call 1-888-227-7669.</p> <h2>6. AARP</h2> <p>Low to moderate income tax filers, particularly those age 60 and older, can use the nation's largest free, volunteer-run tax assistance and preparation service, the <a href="http://www.aarp.org/money/taxes/aarp_taxaide/">AARP Foundation Tax-Aide</a>. Founded in 1968, the service assisted 2.6 million taxpayers last year alone. More than 35,000 trained volunteers are ready and waiting to help with your state and federal returns.</p> <h2>7. MyFreeTaxes</h2> <p>According to the IRS, more than 50% of Americans earned $60,000 or less, qualifying them for free tax-prep services. One of the most popular is <a href="http://www.myfreetaxes.com/">MyFreeTaxes</a>, an interactive resource that provides info on tax prep, valuable tax credits (like the Child Tax Credit), personal finance, and access to sites that will help you file for free.</p> <p>Underwritten by Walmart in collaboration with Goodwill Industries, the National Disability Institute, and United Way Worldwide, MyFreeTaxes is the first free online platform that can be used to file federal and state taxes in all 50 states and the District of Columbia for households earning $60,000 or less.</p> <p>&quot;This online tool allows taxpayers to self-file for free using a simple step-by-step process that includes free telephone, email, and online chat support (offered in English and Spanish) from IRS certified tax specialist,&quot; says Tahira Christmon, a rep for Goodwill Industries. &quot;If a filer is uncomfortable filing online alone, they can access tax coaches and in-person filing assistance at one of our affiliate sites.&quot;</p> <h2>8. inDinero</h2> <p>You have to do a little legwork to get free tax preparation from <a href="http://www.indinero.com">inDinero</a>, but it may be worth it if you don't want to fuss with the DIY method or government-sponsored programs.</p> <p>&quot;We've instituted a very successful customer referral program at inDinero.com,&quot; says Jamie Diamond, PR manager for the site. &quot;We are an all-in-one accounting and tax software and service for startups and small businesses. If a customer successfully refers our solution to a new customer, the original customer gets a free month's service, so they could get their taxes done for free with enough referrals.&quot;</p> <p><em>Do you have other ways to prepare taxes for free? Let me know in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/8-ways-to-file-your-taxes-for-free-in-2015">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/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-2 views-row-even"> <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> <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/use-these-3-tax-reduction-strategies-of-the-rich">Use These 3 Tax-Reduction Strategies of the Rich</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/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</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-afford-to-pay-the-irs">Can&#039;t Afford to Pay the IRS?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes e-filing free tax software IRS Wed, 25 Mar 2015 11:00:10 +0000 Mikey Rox 1353902 at http://www.wisebread.com 7 Ways to Max Out Your IRA Contributions by April 15th http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-to-max-out-your-ira-contributions-by-april-15th" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_piggybank_000013609451.jpg" alt="Woman saving for IRA" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Did you know that if you make a <a href="https://www.fidelity.com/retirement-ira/contribution-limits-deadlines">personal IRA contribution</a> before April 15th of this year, that amount is deductible on your 2014 taxes? If you have the extra cash on hand, this is a great way to boost your retirement account while reducing your current tax burden. Here are seven creative ways to come up with that extra contribution money in the next month.</p> <h2>1. Don't Dine Out</h2> <p>April 15th is about a month away. What if you could make a promise to yourself not to eat out at all in the intervening weeks? Skip the morning coffee pick-up, bring your lunch to work, and find free ways to spend time with friends. Now, take all of that money you would have spent and deposit it into your IRA account, instead. It may sound like a big sacrifice, but it's only a month long and could add up to a big tax break.</p> <h2>2. Lace up Your Walking Shoes</h2> <p>Transportation is another big expense for many people. Consider when you might be able to use your own two feet, take low-cost or free public transportation, or bike to get you from point A to point B. Then, you can bank that transit money right into your IRA account.</p> <h2>3. Delay Spring Wardrobe and Home Purchases</h2> <p>Once the warm weather arrives, we're anxious for a personal and home makeover. If you can delay making any purchases such as these for the next month, you can use that money to contribute to your IRA. Think of it as giving your future self the gift of more freedom by putting that extra money into your retirement account today.</p> <h2>4. Itemize Your Deductions</h2> <p>Many people don't want to be bothered with itemizing their expenses, because it can take some time and requires additional organization and paperwork. However, if your itemized deductions are greater than the standard deduction, you'll save on taxes you owe, or get a bigger refund. Calculate your potential savings and put away that money in your IRA now to enjoy later.</p> <h2>5. Student Loan Interest Deduction</h2> <p>Many working adults today have student loans. If you make less than $80,000 per year as an individual (or less than $160,000 if filing jointly), you can deduct the interest you've paid on student loans. Use the money you'll save on that deduction to increase your contribution to your IRA.</p> <h2>6. Make Your Vacation a &quot;Staycation&quot;</h2> <p>After the rough winter we've had this year, it's tempting to take advantage of the ever-present travel deals being offered. Resist their offers and turn your spring vacation into a staycation. Chances are your hometown comes back to life once it thaws out from winter, and there are plenty of opportunities to re-discover it through events and activities that will help you <em>feel</em> like a tourist in your own backyard.</p> <h2>7. Delay Big Purchases</h2> <p>My laptop is now over five years old, and it's showing its age a bit with decreased speed. I'm tempted by all the features now available on new laptops, but I've decided that I can deal with a bit of decreased speed for the sake of banking some extra money. When it comes to big purchases like electronics, one thing is certain: In six months there will be a brighter, shinier model that's likely no more expensive than today's top-of-the-line. Get as much value out of your durable goods as possible, and only replace them when it's truly necessary. You'll be glad you did once you see that extra money accruing in your savings account.</p> <p>Maxing out your IRA isn't the sexiest purchase you'll ever make, but it's important to contribute as much as you can <em>as soon as you can</em> to take advantage of the compound interest it will generate.</p> <p><em>What clever tricks are you using this tax season to max out your IRA contributions? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/christa-avampato">Christa Avampato</a> of <a href="http://www.wisebread.com/7-ways-to-max-out-your-ira-contributions-by-april-15th">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-this-the-end-of-the-back-door-roth-ira-tax-loophole">Is This the End of the Back-Door Roth IRA Tax Loophole?</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/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers">Don&#039;t Miss These 7 Great Tax Deductions for Parents and Caretakers</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-step-by-step-guide-to-rolling-over-your-401k">The Step-by-Step Guide to Rolling Over Your 401(k)</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/get-a-bigger-refund-with-these-often-overlooked-tax-deductions">Get a Bigger Refund With These Often-Overlooked Tax Deductions</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes deductions IRA saving money Mon, 23 Mar 2015 11:00:09 +0000 Christa Avampato 1350978 at http://www.wisebread.com Can't Pay Your Taxes? Here's What to Do http://www.wisebread.com/cant-pay-your-taxes-heres-what-to-do <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/cant-pay-your-taxes-heres-what-to-do" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple-finances-concern-trouble-bills-iStock_000036486560_Small.jpg" alt="couple paying bills" title="couple paying bills" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>No one likes unexpected bills &mdash; especially <em>big</em> unexpected bills. This time of year, one of these nasty shocks can come in the form of owed income taxes. Common candidates for a hefty income tax bill include the self-employed, especially if you earned a decent income in 2014 but didn't make sufficient quarterly payments.</p> <p>If it looks like it's going to be difficult to pay all that you owe by April 15, here are your options, along with some key facts you need to know. (See also: <a href="http://www.wisebread.com/dont-have-enough-to-pay-your-taxes?ref=seealso">Don't Have Enough to Pay Your Taxes?</a>)</p> <h2>Understanding the Rules</h2> <p>There are two distinct aspects involved in paying taxes: filing your return and paying it. Not filing your return on time and not paying what you owe come with different ramifications. It may surprise you to know that if you don't file your return on time, even if you can't pay all that you owe by April 15, you'll face the biggest penalty.</p> <p>Failing to file on time and not paying all that you owe by the due date will cost you a monthly penalty of 5% of your tax bill plus interest. However, if you do file on time, or <a href="http://www.irs.gov/taxtopics/tc304.html">request a filing extension</a> by midnight on April 15, the penalty drops to half of 1% plus interest. So, at the very least, file your return or request an extension by April 15.</p> <p>Paying as much as you can by the filing deadline will lower your costs as well, since the late payment penalty is based on a percentage of what you haven't paid.</p> <p>Next, you'll have to come to an agreement on how to pay the rest of what you owe. Don't let this slide. Uncle Sam may look friendly, but he has some collection tactics available to him that most other creditors don't. This could be garnishing your wages, taking money from your bank accounts, or slapping a lien on your property.</p> <p>Don't let things get to that point. Instead, explore the following options.</p> <h2>Short-Term Extension</h2> <p>If you think you can pay all of what you owe within 120 days of April 15, apply for an <a href="http://www.irs.gov/Individuals/Online-Payment-Agreement-Application">online payment agreement</a>. You can also call the IRS at 1-800-829-1040 for more information. There is no up-front fee for a short-term payment extension. However, a late-pay penalty (half of 1% of the balance owed per month) and interest will be charged. Still, that should amount to less than what you'd be charged with a longer-term payment agreement.</p> <h2>Long-Term Extension</h2> <p>If you can't pay what you owe within 120 days, you may be eligible to pay your tax bill in monthly installments over the course of up to 72 months. There is a fee of $120 to establish an installment agreement, or $52 if you agree to have your payments automatically deducted from your bank account. While you'll still have to pay interest, if you filed your return on time, the monthly late-pay penalty will be half of 1% of what you owe.</p> <p>If you owe the IRS $50,000 or less (including penalties and interest), you should be able to set up the online payment agreement. If you owe more than $50,000, you'll need to complete <a href="http://www.irs.gov/pub/irs-pdf/f9465.pdf">Form 9465</a> and supply the IRS with a Collection Information Statement (<a href="http://www.irs.gov/pub/irs-pdf/f433f.pdf">Form 433-F</a>).</p> <h2>Temporary Delay</h2> <p>If your circumstances are such that you can't pay any of what you owe, and you're not sure when you'll be able to, the IRS may temporarily delay collection until your financial condition improves. However, your debt will grow because penalties and interest will accrue until you come up with the full amount. During the temporary delay, the IRS will continue to review your ability to pay. The government may also place a lien on real estate or other property you own. Contact the IRS at 1-800-829-1040 for more information about requesting a temporary delay.</p> <h2>Offer in Compromise</h2> <p>If you can't afford an installment agreement, you could offer to settle your tax debt in one lump sum totaling less than what you owe. Whether you'll qualify depends, in part, on your income, expenses, assets, and the IRS' assessment of your ability to pay. However, be forewarned: Relatively few offers in compromise are accepted. There is also a non-refundable $186 application fee, and most applicants have to make an up-front, non-refundable partial payment when they apply. So, make sure you feel confident about meeting the requirements. You'll need to demonstrate that situation is such that you will never be able to pay back everything you owe. Details are in the IRS' <a href="http://www.irs.gov/pub/irs-pdf/f656b.pdf">Offer in Compromise booklet</a>.</p> <h2>Consider Inside Assistance</h2> <p>If you are having a difficult time resolving an IRS tax dispute, contact the IRS <a href="http://www.irs.gov/Advocate">Taxpayer Advocate Service</a>. This is an independent organization within the IRS designed to provide free help to people whose tax issues are causing financial difficulty. Here's how to <a href="http://www.irs.gov/Advocate/Local-Taxpayer-Advocate">contact the Taxpayer Advocate Service</a> office nearest you.</p> <h2>Avoid Outside &quot;Assistance&quot;</h2> <p>You may be tempted to turn to a private company for help in settling your tax debt for less than you owe through an offer in compromise, but beware. Such companies often charge steep up-front fees, and there are some unscrupulous players in this field.</p> <h2>Take Action</h2> <p>If you have a big tax bill you can't pay, you may be tempted to just ignore it. But that will make the problem worse as interest and penalties pile up. As just described, there are several options for paying what you owe over time.</p> <p>For more guidance on what to do if you can't pay your tax bill, read, <a href="http://www.irs.gov/newsroom/article/0,,id=201853,00.html">The &quot;What-Ifs for Struggling Taxpayers</a>&quot; on the IRS web site.</p> <p>Whether you owe money this year or are due for a refund, right now might also be a good time to think ahead and start planning for <a href="https://www.soundmindinvesting.com/articles/view/time-to-start-planning-for-next-years-tax-bill">next year's tax season</a>.</p> <p><em>Have you ever been walloped by an unexpected tax bill? How did you cope?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/cant-pay-your-taxes-heres-what-to-do">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/can-you-settle-your-old-irs-debts">Can You Settle Your Old IRS Debts?</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/8-ways-to-file-your-taxes-for-free-in-2015">8 Ways to File Your Taxes for Free in 2015</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/use-these-3-tax-reduction-strategies-of-the-rich">Use These 3 Tax-Reduction Strategies of the Rich</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/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes income tax IRS tax extensions tax filing Tue, 17 Mar 2015 13:00:10 +0000 Matt Bell 1336783 at http://www.wisebread.com Is This the End of the Back-Door Roth IRA Tax Loophole? http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-this-the-end-of-the-back-door-roth-ira-tax-loophole" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/president obama speech_0.jpg" alt="president obama speech" title="president obama speech" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of America's most beloved tax-trimming strategies may soon be outlawed.</p> <p>Deep inside President Barack Obama's proposed <a href="http://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/budget.pdf">Fiscal Year 2016 budget</a> is a measure &mdash; &quot;Limit Roth conversions to pre-tax dollars&quot; &mdash; that could put the kibosh on a practice used by high earners to dodge the income limits on Roth IRA contributions. The verbiage in the budget proposal is succinct, and therefore unclear. But experts say those six little words could stop high earners from contributing to their Roth by way of the back-door strategy.</p> <h2>What's the Big Deal With Back-Door Roths?</h2> <p>The Roth IRA offers account holders something very valuable: tax-free income in retirement. Since contributions to Roths are made using <em>after-tax dollars</em>, these accounts are not taxed as they grow, and no tax money is due when funds are withdrawn in retirement. The catch is that you can only directly <a href="http://www.wsj.com/video/psstthe-backdoor-route-to-a-roth-ira/09198754-C88E-4767-84F5-1FAD8547EBE9.html">contribute to a Roth IRA</a> if your income is below a certain ceiling. For jointly filing married couples, that limit is $191,000. For single filers, it's $129,000. Folks with income beyond those barriers may instead contribute to a traditional IRA account.</p> <p>But high earners (who value the benefits of these Roth accounts as much as the everyman) have a way of dodging the contribution limits that prevent them from enjoying these tax perks. Using the back-door strategy, high earners can make after-tax contributions to a traditional IRA account, for which there are no income restrictions, and then convert that account into a Roth. This method affords all the benefits of a Roth account with few of the limitations. And it's precisely this practice that Obama budget proposal wants to eradicate.</p> <h2>Uncertainty Around the Proposal</h2> <p>&quot;It seems to me they're saying that was a good workaround, but we don't want you to do it anymore,&quot; IRA expert and CPA Ed Slott told Forbes.</p> <p>But Slott says ending the back-door strategy is not so simple. One issue with Obama's l<a href="http://www.forbes.com/sites/ashleaebeling/2015/02/02/obama-budget-would-prohibit-backdoor-roth-iras/">oophole closure proposal</a> is that it doesn't jibe with the Internal Revenue Service's new rules on <a href="http://www.forbes.com/sites/ashleaebeling/2014/10/15/aftertax-401k-rollovers-advanced-version/">after-tax rollovers</a>, which actually make it easier to convert after-tax dollars into Roth IRA accounts.</p> <p>&quot;They didn't look at the practicality of how it butts heads with the rules that we're working with now,&quot; Slott says.</p> <p>Now, it's important to keep in mind that the president's budget is more of a wishlist than a decree. It's bound to get rewritten, trimmed, and cut as the budget vetting process continues in Congress. But it's an important indicator of what the administration is thinking. And if you're a high earner enjoying the benefits of back-door Roths, it may signal an upcoming change in your retirement planning.</p> <p><em>Do you think back-door Roths should be eradicated? Why or why not?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</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/the-step-by-step-guide-to-rolling-over-your-401k">The Step-by-Step Guide to Rolling Over Your 401(k)</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-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> <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/9-changes-that-will-affect-your-money-in-2015-0">9 Changes That Will Affect Your Money in 2015</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes IRA Roth tax evasion Thu, 12 Mar 2015 13:00:08 +0000 Brittany Lyte 1333205 at http://www.wisebread.com Use These 3 Tax-Reduction Strategies of the Rich http://www.wisebread.com/use-these-3-tax-reduction-strategies-of-the-rich <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/use-these-3-tax-reduction-strategies-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/young_couple_financial_consultant_000022185447.jpg" alt="Young couple meeting with financial consultant" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Even more than a house or a top-notch college education, income taxes are probably the single largest expense you'll ever encounter in life. And you already know there are all sorts of little tax tricks that can be used every year to shave off a little of your overall debt to the IRS. What you probably didn't know is that there are a few more advanced strategies, mainly utilized by the millionaire's club, that can greatly reduce &mdash; and sometimes completely eliminate &mdash; your taxes. And they work just as well for the everyman (that means you!) as they do for members of the upper crust. (See also: <a href="http://www.wisebread.com/16-great-tax-deductions-you-may-have-overlooked?ref=seealso">16 Great Tax Deductions You May Have Missed</a>)</p> <p>Intrigued?&nbsp;Read on for our guide to making the tax-reduction strategies of the wealthy work for you.</p> <h2>1. For People Who Own Stock</h2> <p><a href="http://www.bloomberg.com/bw/articles/2012-04-17/how-to-pay-no-taxes-10-strategies-used-by-the-rich">Warren Buffett's tax rate</a> is effectively lower than the rate paid by the people who clean his office, and the strategy he uses to pull it off can also work for you. Most of Buffett's income is from dividends, which are taxed at a lower rate than ordinary income. But if he were to simply sell his shares for cash, he'd still get hit with a pretty hefty amount of capital-gains taxes.</p> <p>For example's sake, let's say he has $200 million worth of stock that he wants to redeem for cash. If he sells, he'll be required to turn over a hefty $30 million, or so, in taxes. But if he borrows $200 million from an investment bank and uses the shares as collateral, he'll get the cash while avoiding having to fork over a small fortune to the IRS. Buffett's strategy of cashing in on stock without losing any gains is a smart one that you can use, too. In fact, Robert Willens, who runs an independent firm that advises investors on tax issues, told Bloomberg Business it's a tax-reduction ploy that's &quot;alive and well.&quot;</p> <p>Sound too complicated for you? Here's an easier trick: When you sell stock for profit, consider also selling any losers in your portfolio. This technique, known as <a href="http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp">&quot;tax loss harvesting,&quot;</a>&nbsp;can help you potentially shave thousands off your tax bill, since the IRS will subtract your losses from our gains for tax purposes.</p> <h2>2. For Commercial Property Owners</h2> <p>Here's a tip from the tax-avoidance pros, as explained by Bloomberg Business. The idea is to <a href="http://www.bloomberg.com/bw/articles/2012-04-17/how-to-pay-no-taxes-10-strategies-used-by-the-rich#p2">relinquish your property ownership</a> in exchange for cash without getting hit by big capital-gains taxes. First, establish a 50-50 partnership with a partner for any properties you own. Then, allow one partner to cash out. If we're talking about a $100 million office building, a 50% cash-out would trigger about $7.5 million in capital-gains taxes.</p> <p>Now, the partner who's cashing out needs to turn his ownership of the property into a loan. So the partnership borrows $50 million and puts it into a new subsidiary partnership, which contributes the cash to yet another new partnership. This newest partnership lends the $50 million to a finance company for three years in exchange for a three-year note. The partner cashing out now owns a loan note valued at $50 million, effectively liquidating his 50% interest. Three years later, the note is repaid and the partner gains ownership of 100% of a partnership sitting on a $50 million pile of cash &mdash; without triggering any capital-gains tax.</p> <h2>3. For Residential Real Estate Owners</h2> <p>Bill and Hillary Clinton use trusts to <a href="http://www.bloomberg.com/news/articles/2014-06-17/wealthy-clintons-use-trusts-to-limit-estate-tax-they-back">eliminate estate tax</a>, and so can you. Here's the secret: create <a href="http://en.wikipedia.org/wiki/Qualified_personal_residence_trust">residence trusts</a> and shift ownership of your home(s) into them. That's it! The advantage here is that any appreciation in the value of your property will fall outside the umbrella of your taxable estate. While your tax savings might not be huge at first, they could become quite significant a few years down the road. &quot;The goal is really be thoughtful and try to build up the nontaxable estate, and that's really what this is,&quot; David Scott Sloan, a partner at Holland &amp; Knight LLP in Boston, told a reporter for Bloomberg Business. &quot;You're creating things that are going to be on the nontaxable side of the balance sheet when they die.&quot;</p> <p><em>How creative are you at avoiding taxes?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/use-these-3-tax-reduction-strategies-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-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/8-ways-to-file-your-taxes-for-free-in-2015">8 Ways to File Your Taxes for Free in 2015</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/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-3 views-row-odd"> <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> <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/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</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-afford-to-pay-the-irs">Can&#039;t Afford to Pay the IRS?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes capital gains IRS tax avoidance tax scams Tue, 10 Mar 2015 13:00:08 +0000 Brittany Lyte 1332950 at http://www.wisebread.com 9 Changes That Will Affect Your Money in 2015 http://www.wisebread.com/9-changes-that-will-affect-your-money-in-2015-0 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-changes-that-will-affect-your-money-in-2015-0" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/looking-to-future.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As we start 2015, I wanted to pass along&nbsp;nine changes that&rsquo;ll affect&nbsp;your money&nbsp;next year so you can factor them into your financial plans:</p> <p><strong>1. You&rsquo;ll be allowed to stash more money into some types of retirement plans.&nbsp;</strong></p> <p>The maximum contribution limit for&nbsp;<a href="http://www.irs.gov/uac/Newsroom/IRS-Announces-2015-Pension-Plan-Limitations;-Taxpayers-May-Contribute-up-to-$18,000-to-their-401%28k%29-plans-in-2015" target="_blank">401(k) and 403(b)</a>&nbsp;employer-sponsored plans will rise by $500 to $18,000 if you&rsquo;ll be under 50 and to $24,000 (a $6,000 catch-up) if you&rsquo;ll be 50 or older. Those&nbsp;<a href="http://www.nextavenue.org/article/2014-01/5-best-money-strategies-boomers">catch-up contribution</a>&nbsp;boosts for people 50+ are overdue; the catch-up amount has been stuck at $5,550 for a few years.<br /> &nbsp;<br /> Similarly, the maximum contribution for a&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Choosing-a-Retirement-Plan:-SIMPLE-401%28k%29-Plan" target="_blank">SIMPLE 401(k)</a>or a&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-SIMPLE-IRA-Contribution-Limits" target="_blank">SIMPLE IRA</a>&nbsp;&mdash; the type of plans often used by small companies &mdash; will also go up by $500, to $12,500 for those under 50 and to $15,500 (or a $3,000 catch-up) for those 50 and older.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2014-11/7-smart-year-end-tax-moves-prepare-2015">7 Year-End Tax-Saving Moves</a>)<br /> &nbsp;<br /> The news is better still for the self-employed or small business owners who plan to fund&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions" target="_blank">SEP IRAs</a>&nbsp;or&nbsp;<a href="http://www.irs.gov/Retirement-Plans/One-Participant-401%28k%29-Plans" target="_blank">Solo 401(k)s</a>&nbsp;in 2015: they&rsquo;ll be allowed to invest $1,000 more than in 2014. The 2015 limit: a bountiful $53,000.</p> <p>&ldquo;In general, we prefer the SEP IRA to a Solo 401(k), because of its overall simplicity,&rdquo; says Joshua Kadish, of the RPG Life Transition Specialists wealth management firm in Chicago, Ill.<br /> &nbsp;<br /> <strong><strong>2. You might finally be able to save for retirement through the Obama Administration&rsquo;s new&nbsp;<a href="https://myra.treasury.gov/" target="_blank">myRA</a>&nbsp;option</strong>.&nbsp;</strong></p> <p>Remember when the President announced this account (myRA, which rhymes with IRA, is short for &ldquo;my retirement account&rdquo;) in his 2014&nbsp;<a href="http://www.nextavenue.org/blog/state-union-and-older-americans">State of the Union&nbsp;</a>address? Well, it&rsquo;s still not available, but will be &mdash; for some people &mdash; &nbsp;in 2015.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/article/2014-12/5-smart-tax-savers-year-end-charitable-giving">Tax Savers for Year-End Charitable Giving</a>)<br /> &nbsp;<br /> The government is now working with a small group of employers participating in a pilot phase of the program. A U.S. Department of Treasury spokesperson told me: &ldquo;Treasury looks forward to working with these employers to refine myRA before it becomes more broadly available in 2015.&rdquo;<br /> &nbsp;<br /> A myRA will be a no-fee Roth IRA for people whose employers don&rsquo;t currently offer retirement plans. The federal government will guarantee myRA income (through special retirement savings bonds) and employee aftertax contributions will be made through payroll deductions. Contributions won&rsquo;t be tax-deductible, but interest earnings will grow tax-free and withdrawals won&rsquo;t be taxed. MyRAs will be limited to individuals with income below $129,000 and to couples with incomes under $151,000.<br /> &nbsp;<br /> There&rsquo;ll be a $15,000 limit on the amount you can accumulate in a myRA over 30 years; after that, the money must be transferred to a Roth IRA account managed by a financial services firm.</p> <p>(<strong>MORE</strong>:&nbsp;<a href="http://www.nextavenue.org/blog/top-10-medical-innovations-2015" target="_blank">Top 10 Medical Innovations for 2015</a>)<br /> &nbsp;<br /> &ldquo;I&rsquo;m not ready to say that everyone should jump on board for a myRA,&rdquo; says Kadish. &ldquo;There may be a benefit for having a tax deductible IRA instead, if you qualify. With a standard Roth IRA, you have 100 percent control over how the money is invested.&rdquo;</p> <p><strong>3. Beginning in 2015, you&rsquo;ll be limited on the number of&nbsp;<a href="http://www.irs.gov/Retirement-Plans/IRA-One-Rollover-Per-Year-Rule" target="_blank">nontaxable IRA rollovers</a>&nbsp;you can make.&nbsp;</strong></p> <p>The Internal Revenue Service will cap them to one every 12 months. The government is doing this to crack down on the loophole that let people effectively get short-term, interest-free loans by taking money out of their IRAs and then depositing the cash into new retirement accounts.<br /> &nbsp;<br /> <strong>4. The income limit to claim the&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29" target="_blank">Saver&rsquo;s Credit</a>&nbsp;will rise a bit, too</strong>.</p> <p>In 2015, it&rsquo;ll be boosted by $1,000 for married couples filing jointly (to adjusted gross income of $61,000) and by $500 for singles (to $30,500). This&nbsp;<a href="http://www.nextavenue.org/article/2014-12/uncle-sam-may-want-give-you-2000-retirement">little-known credit</a>&nbsp;lets qualifying taxpayers get a tax break for contributing to 401(k)s and IRAs.<br /> &nbsp;<br /> <strong><strong>5. The&nbsp;<a href="http://taxfoundation.org/article/2015-tax-brackets" target="_blank">standard deduction</a>&nbsp;will go up by $100 for singles (to $6,300) and by $200 for married couples filing jointly (to $12,600).</strong>&nbsp;</strong></p> <p>As you likely know, you&rsquo;ll be able to itemize your deductions if they&rsquo;ll exceed the standard deduction.</p> <p><strong><strong>6. There&rsquo;ll be teeny increases in the&nbsp;<a href="http://www.irs.gov/uac/Newsroom/In-2015,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments" target="_blank">personal exemption</a>&nbsp;and the amount you can save in a&nbsp;<a href="http://www.irs.gov/uac/Newsroom/In-2015,-Various-Tax-Benefits-Increase-Due-to-Inflation-Adjustments" target="_blank">Flexible Spending Account</a>&nbsp;(FSA) in 2015.</strong>&nbsp;</strong></p> <p>Both will inch up by $50: The personal exemption will be $4,000 (though it&rsquo;ll phase out for singles whose incomes will be $258,250 or higher and for married couples filing jointly with incomes of $309,900 or more). The FSA limit rises to $2,500 next year.</p> <p><strong><strong>7. The&nbsp;<a href="http://taxfoundation.org/article/2015-tax-brackets" target="_blank">Alternative Minimum Tax exemption</a>&nbsp;will go up by about 1.5 percent next year.</strong></strong></p> <p>The exemption amount will be $53,600 for individuals and $83,400 for married couples filing jointly.</p> <p><strong>8. Social Security payments will nudge up, but so will the amount of income subject to Social Security taxes.&nbsp;</strong></p> <p>Benefits checks for the nation&rsquo;s 58 million Social Security recipients will rise by 1.7 percent in 2015, due to the annual&nbsp;<a href="http://www.ssa.gov/news/press/factsheets/colafacts2015.html" target="_blank">Cost of Living Adjustment</a>. That amounts to roughly $22 a month, on average, according to AARP.<br /> &nbsp;<br /> That 1.7 percent increase is a smidge higher than the coming 1.3 percent rise ($1,500) in the portion of income that&rsquo;ll be subject to Social Security tax in 2015. The income ceiling will be $118,500, up from $117,000 in 2014.<br /> &nbsp;<br /> <strong>9. The Obamacare penalty for not having health insurance in 2015 will more than triple</strong>.</p> <p>In 2014, the&nbsp;<a href="https://www.healthcare.gov/fees-exemptions/fee-for-not-being-covered/" target="_blank">Obamacare penalty</a>&nbsp;was $95 per adult or 1 percent of income, whichever was greater; in 2015, it&rsquo;ll shoot up to $325 per adult or 2 percent of income.</p> <p><strong>What Will Be the Same in 2015</strong><br /> &nbsp;<br /> Two things that won&rsquo;t change: the annual&nbsp;<a href="http://www.forbes.com/sites/ashleaebeling/2014/10/30/irs-announces-2015-estate-and-gift-tax-limits" target="_blank">gift tax exclusion</a>&nbsp;(still $14,000) and the&nbsp;<a href="http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits" target="_blank">limits for traditional and Roth IRAs</a>&nbsp;(still $5,500 if you&rsquo;re under 50 and $6,500 if you&rsquo;re 50 or older).</p> <p>&ldquo;The lack of an increase in the IRA limits flies in the face of everything we&rsquo;re hearing about people living longer and needing to save more,&rdquo; says Kadish. &ldquo;There&rsquo;s no rhyme or reason to it.&rdquo;</p> <div class="field field-type-text field-field-blog-teaser"> <div class="field-items"> <div class="field-item odd"> Several retirement contribution limits are raised, Obamacare penalty triples, myRA officially launches and many more tax and social security changes. </div> </div> </div> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p><em>Richard Eisenberg is the senior Web editor of the Money &amp; Security and Work &amp; Purpose channels of <a href="http://www.nextavenue.org/">Next Avenue</a> and Assistant Managing Editor for the site. Follow him on Twitter </em><a href="http://twitter.com/richeis315"><em>@richeis315</em></a><em>. Check out more great articles from Next Avenue:</em></p> <ul> <li><a href="http://www.nextavenue.org/blog/best-places-retire-abroad-2015">The Best Places to Retire Abroad in 2015</a></li> <li><a href="http://www.nextavenue.org/blog/surprising-secrets-successful-retirees">The Surprising Secrets of Successful Retirees</a></li> <li><a href="http://www.nextavenue.org/article/2015-01/3-health-resolutions-you-can-actually-keep-2015">3 Health Resolutions You Can Actually Keep in 2015</a></li> </ul> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/next-avenue">Next Avenue</a> of <a href="http://www.wisebread.com/9-changes-that-will-affect-your-money-in-2015-0">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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</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/is-this-the-end-of-the-back-door-roth-ira-tax-loophole">Is This the End of the Back-Door Roth IRA Tax Loophole?</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-tax-moves-you-need-to-make-right-now">6 Tax Moves You Need to Make Right Now</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/tax-penalties-for-early-retirement-withdrawals">Tax Penalties for Early Retirement Withdrawals</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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes Wed, 14 Jan 2015 16:00:10 +0000 Next Avenue 1280157 at http://www.wisebread.com You Should Make These 11 Easy Donations Before Time Runs Out http://www.wisebread.com/you-should-make-these-11-easy-donations-before-time-runs-out <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/you-should-make-these-11-easy-donations-before-time-runs-out" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman-donation-volunteers-Dollarphotoclub_45319912.jpg" alt="woman donation volunteers" title="woman donation volunteers" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's natural this time of year to feel a little more charitable. Many nonprofit organizations <a href="http://www.slate.com/articles/life/holidays/2013/12/year_end_charitable_giving_most_people_are_terrible_at_it_don_t_be_one_of.html">report that they see a surge of donations in the last month</a> of the year, and there are some advantages to making donations before the calendar turns another page.</p> <p>In addition to keeping with the holiday spirit, giving to charity before year's end ensures that you can get a tax deduction to count for 2014. In in some instances, corporations are in an extra giving mood and will match many cash donations. (See also: <a href="http://www.wisebread.com/15-ways-to-give-to-charity-that-fit-a-holiday-budget?ref=seealso">15 Ways to Give to Charity That Fit a Holiday Budget</a>)</p> <p>If you're feeling charitable or just have some stuff you want to unload, consider these simple donations you can make before 2015 comes around. (Just make sure you keep good records for the tax man!)</p> <h2>1. Clothes and Household Items</h2> <p>There's a good chance you'll get some new clothes and other stuff for the holiday season. Now may be a time to donate some of your older (but still usable) items to a thrift shop or charity such as Goodwill. You'll free up some closet space and get a 2014 tax deduction in the process. This time of year, coats and other warm-weather items are especially needed.</p> <h2>2. Food</h2> <p>Local food pantries are always in need of donations, especially during the winter months. Drop off a few bags of canned goods, or get in touch with a charity such as Meals on Wheels to donate food to a shut-in. You're probably cooking a ton for the holiday feast anyway, so set some aside for a needy family.</p> <h2>3. Shares of Stock</h2> <p>If you've seen portions of your investment portfolio rise in 2014, why not share the wealth? Donating shares of stock is a great way to help out a charity because unlike a cash donation, the contribution may rise in value. You get a tax deduction by donating, and also avoid any capital gains fees you might have otherwise incurred by selling.</p> <h2>4. A Car</h2> <p>If you're thinking of buying a new car in 2015, consider donating your car to charity this year to get the tax benefits. Many charities will accept donations of cars, which they then sell at auctions and pocket the proceeds. Other charities turn the cars over directly to needy families. A car donation is tax deductible, and many charities will even go through the effort to pick up the car from your house free. Donating your car makes sense if you feel like you wouldn't get much for a trade-in anyway.</p> <h2>5. New Toys</h2> <p>It's almost impossible to avoid seeing the U.S Marines manning Toys For Tots stations all over the country. A donation of a new toy will help ensure a great Christmas for an underprivileged child. This year, Toys For Tots is looking to collect 7 million toys. Go to <a href="http://toysfortots.com">Toysfortots.com</a> to find a drop-off location near you.</p> <h2>6. Old Building Materials</h2> <p>When my family built a new addition to our house, we donated some old windows and a sliding glass door to <a href="http://www.loadingdock.org/">a local charity</a> that recycles such things. It was a stress-free way to unload the items, and we got a sizable tax deduction. Contact the <a href="http://bmra.org/">Building Materials ReUse Association</a> to see if there's a charity near you.</p> <h2>7. Your Time</h2> <p>Rather than spending a day at a mall indulging in retail excess, consider taking time to help out at a soup kitchen, food pantry, or other charity. Better yet, consider making a commitment to volunteer not only during this holiday season but throughout the year.</p> <h2>8. Your Artistic Talent</h2> <p>This time of year, it's common for organizations to have parties featuring silent auctions as fundraisers. If you're an artist or photographer, why not donate a painting or photograph? It's a great way to direct money to a charity and perhaps also get some exposure for your skills. Similarly, a musician could volunteer to perform holiday music at a charitable event, or even offer free lessons.</p> <h2>9. Cash</h2> <p>This may seem lazy, but most charities are more than happy to receive monetary donations. In fact, sometimes money is the best gift to a charity because they know better than anyone what specific items they need. Donating cash could be as easy as dropping some coins into a Salvation Army pot, or writing a sizable check to another non-profit group.</p> <h2>10. Blood</h2> <p>This time of year, blood donations are often low because people are so busy. But it's a great way to give back in a way that won't cost you a dime. I make a point of donating blood every December 24 at my local Red Cross donation center. It gets me in the Christmas spirit, and there are usually free cookies. Go to <a href="http://www.redcross.org/">RedCross.org</a> to locate a blood drive or donation center near you.</p> <h2>11. Money to Your Future Self</h2> <p>This may not be a &quot;donation&quot; in the classic sense. But it's still a great idea to try to max out your retirement accounts by the end of the year. If you have an IRA, you can contribute up to $5,500 for 2014. Any contribution up until April 15, 2015 counts toward 2014, but why wait?</p> <p><em>What will you be giving this year? Please share in comments!</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/you-should-make-these-11-easy-donations-before-time-runs-out">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/charitable-giving-get-a-receipt">Charitable giving - get a receipt</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/ten-great-charities-that-deserve-your-dollars-this-year">Ten Great Charities that Deserve Your Dollars This Year</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/why-you-should-donate-a-blood-sucking-timeshare">Why You Should Donate a Blood Sucking Timeshare</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/cash-for-clunkers-bill-passed-by-congress-what-does-it-mean-for-consumers">&quot;Cash for clunkers&quot; bill passed by Congress - what does it mean for consumers?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living Taxes charity donations giving tax deductions taxes Wed, 24 Dec 2014 14:00:10 +0000 Tim Lemke 1271198 at http://www.wisebread.com 6 Things the IRS Doesn't Want You to Know About Them http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-things-the-irs-doesnt-want-you-to-know-about-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/irs-176603977-small.jpg" alt="irs" title="irs" class="imagecache imagecache-250w" width="250" height="135" /></a> </div> </div> </div> <p>&quot;The rich and the poor are alike; they both worry about taxes.&quot; &mdash; Anon</p> <p>There is perhaps no entity disliked more than the Internal Revenue Service (IRS). It feels the brunt of our disdain during the late winter and early spring each year and &mdash; for some unfortunate souls &mdash; far beyond into the future. The IRS has become the punchline to many jokes in the years since its inception. (See also: <a href="http://www.wisebread.com/15-surprising-facts-about-income-tax?ref=seealso">15 Surprising Facts About Taxes</a>)</p> <p>However, there are secrets that the IRS doesn't want everyone to know. These secrets may make your life a little easier and alleviate some of that anxiety that occurs every year around April 15.</p> <h2>1. People Who Earn Less Than $200K Probably Won't Get Audited</h2> <p>This is great for the average taxpayer. Most of us do not make more than $200,000 a year even with two-income households. Reports show that those making over that amount have a 3% chance of being audited while those making more than $1 million have a 6% chance. Those same reports show that those of us making <a style="text-decoration:none;" href="http://www.forbes.com/sites/anthonynitti/2013/03/25/what-are-your-odds-of-being-audited-by-the-irs/">less than $200,000 have a less than 1% chance</a>. So relax as you hit send on your return each year. You are probably going to be just fine.</p> <h2>2. The IRS Fails to Collect Billions of Taxes Owed Every Year</h2> <p>In recent years, the amount of <a href="http://www.gao.gov/products/GAO-11-272">uncollected tax dollars reached $350 billion</a>! Whether you believe that this unclaimed money should be use for programs or to simply pay down our existing national debt, this is money that Americans are not paying as they should be. (This number is estimated to be low, however, as it depends on people to self-report to estimate what they owe.)</p> <h2>3. The IRS Is Not Really Interested in Seizing Property</h2> <p>If you have gotten behind in paying taxes and are dealing with a collection agent, you may find him or her threatening to seize your property and assets. However, <a href="http://www.investopedia.com/articles/tax/09/enforced-collections.asp">this isn't really their goal</a>, just a threat they like to make to get you into action.</p> <p>Bank accounts are easy to seize and the IRS will do it. However, taking your property and reselling it does not bring in much of a return for the hours and money spent. Your wages can also be garnished relatively easy, and that will be done if you ignore the requests to pay back money owed long enough.</p> <h2>4. Not Every IRS Agent Has a Background in Finance and Taxes</h2> <p>In fact, entry level workers who man the call centers, perform tax audits, and attempt to collect money usually have very little grasp on the tax law. They are trained to perform their jobs in a specific way and may not have the background knowledge required.</p> <p>In addition, it has been found that those you speak to at the IRS can, in fact, <a href="http://www.cbsnews.com/news/irs-cant-do-the-math/">give you the wrong answer</a> almost half the time. For questions about tax law, it is always best to seek the counsel of a trusted CPA or tax attorney.</p> <h2>5. Filing Electronically Saves You a Lot of Hassle</h2> <p>Many issues that arise are due to filing your returns with paper and the USPS. Checks get lost in the mail and delay refunds as well as returns. Numbers get transposed on the forms or addition fails to add up. Social security numbers get entered wrong. All of these things can cause a flag to pop up for a possible audit, delay a refund getting to you, or cause your return to be delayed.</p> <p><a href="https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/Top-Five-Ways-to-Avoid-a-Tax-Audit/INF19031.html">Filing electronically saves you the hassle</a> during the filing process, gets your refund to you quicker, and can give you a peace of mind after you've filed knowing your chances of that audit are reduced.</p> <h2>6. The IRS (or at Least Their Machines) Make Mistakes</h2> <p>Just because the IRS says you owe money, it isn't necessarily so. In fact, the best move you can make when getting an audit notice (especially one that can easily be proven wrong) is to move forward with getting it amended. I actually received a CP-2000 audit notice, claiming I failed to report over $50,000 in income, and it came attached with an $18,000 tax bill, plus fees. It turns out that they mistakenly counted a $600.00 1099-form from a client as a $60,000 1099-form. With the help of a few form letters found on my tax preparer's website and prompt communication, the audit was closed in my favor.</p> <p>Paying income taxes isn't the highlight of anyone's financial life, but for now, it's here to stay. By being informed and remembering that, even the IRS isn't perfect, you can possibly avoid having to pay more than you really owe.</p> <p><em>Do you know any IRS secrets you can reveal? Please share in comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/linsey-knerl">Linsey Knerl</a> of <a href="http://www.wisebread.com/6-things-the-irs-doesnt-want-you-to-know-about-them">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/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</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/cant-afford-to-pay-the-irs">Can&#039;t Afford to Pay the IRS?</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/taxes-on-irregular-income">Taxes on irregular income</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/charitable-giving-get-a-receipt">Charitable giving - get a receipt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes audits IRS taxes Wed, 18 Jun 2014 21:00:04 +0000 Linsey Knerl 1145123 at http://www.wisebread.com 6 Tax Moves You Need to Make Right Now http://www.wisebread.com/6-tax-moves-you-need-to-make-right-now <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-tax-moves-you-need-to-make-right-now" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/thinking-474902869.jpg" alt="thinking" title="thinking" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>With tax day thankfully behind us for another year, the last thing you probably want to think about right now is&hellip; taxes! But this is the ideal time to plan ahead for a less &quot;taxing&quot; April 15th next year. Here are the best moves to make right now. (See also: <a href="http://www.wisebread.com/the-10-worst-tax-moves-you-can-make?ref=seealso">The 10 Worst Tax Moves You Can Make</a>)</p> <h2>1. Estimate Your Taxes</h2> <p>If you're like most taxpayers, you probably got <a href="http://www.wisebread.com/50-smart-things-to-do-with-your-tax-refund">a refund</a> this year. That may have felt like a nice bonus, and it's okay if you treat it as forced savings that may not have happened otherwise. However, getting money back means you overpaid your taxes. And with the average refund weighing in at over $2,800, that's a hefty overpayment.</p> <p>While you have to pay your taxes, you <em>do not</em> have to overpay. To estimate what you'll really owe in federal taxes this year, grab a copy of the return you just filed and pencil in what your numbers are likely to look like this year. Or just visit the <a style="text-decoration:none;" href="http://www.irs.gov/Individuals/IRS-Withholding-Calculator">IRS Withholding Calculator</a>, and run some numbers that way.</p> <p>Next, look at how much federal tax currently is being withheld on your paychecks, multiply it by the number of checks you'll receive this year, and compare it to your estimates. If you're on a path to overpay again this year, contact your employer's HR department and ask to have less withheld from your paycheck. Or, if you're self-employed, lower your quarterly estimated payments accordingly.</p> <p>Now do the same thing with your state taxes, although your state probably doesn't have an online calculator. So, print a form from your state's Department of Revenue or Secretary of State's office website and run the numbers manually.</p> <h2>2. Increase Your Retirement Savings</h2> <p>If you got a big refund this year and plan to follow the advice we just discussed, put some or all of your new monthly surplus into a tax-advantaged retirement savings plan, such as a 401(k) or IRA. That'll strengthen your future financial security and may also reduce your tax bill.</p> <p>At more and more workplaces, employees have a choice between participating in a traditional 401(k) or a Roth 401(k) &mdash; or a traditional or Roth 403(b) if you work for a tax-exempt organization such as a school, charity, or government organization. The main difference between a traditional and a Roth retirement plan is how taxes are treated. With a traditional plan, every dollar you contribute reduces your taxable income. You get the tax break now, and then pay taxes on your contributions and earnings when you withdraw the money in retirement.</p> <p>With a Roth, your contributions do not reduce your taxable income, but when you withdraw money from the account in your later years you can do so tax-free.</p> <p>In general, the decision comes down to a comparison between your tax rate today and an educated guess about your tax rate when you retire. When you're in the early years of your career, chances are your salary isn't very high, so your tax rate isn't very high. You may be better off with a Roth. But if you're on the higher end of the earnings spectrum, you may be better off with a traditional 401(k). If that's you, increasing your contributions this year will lower your tax bill.</p> <p>In 2014, you are eligible to contribute $17,500. Those age 50 and older can contribute another $5,500.</p> <p>If you don't have access to a 401(k), the same advice applies to investing in a traditional or Roth individual retirement account (IRA), although the contribution limits are much lower &mdash; $5,500, and another $1,000 if you are 50 or older.</p> <h2>3. Save for Your Health Care</h2> <p>There are two primary ways to save on taxes when saving for health care costs.</p> <h3>Open a Health Savings Account</h3> <p>An increasingly popular way to pay for health care is to pair a high-deductible health insurance plan with a <a href="http://www.mayoclinic.org/healthy-living/consumer-health/in-depth/health-savings-accounts/art-20044058">health savings account</a> (HSA). The high deductible gets you a relatively low insurance premium. You then you cover the deductible and other out-of-pocket health care expenses by making tax-deductible contributions to an HSA. For individuals, a health insurance plan with a deductible of $1,250 qualifies you for an HSA. For families, the deductible must be at least $2,500. Individuals can then make tax-deductible contributions into an HSA of up $3,300; families can contribute $6,550. One great benefit of an HSA is the ability to roll over unused funds from one year to the next.</p> <h3>Participate in a Flexible Spending Account</h3> <p>If you don't qualify for a health savings account, your employer may offer a flexible spending account (FSA) for out-of-pocket health care costs. This one is a little trickier and not as advantageous as an HSA. Like an HSA, contributions into an FSA reduce your taxable income, but the maximum you can contribute is $2,500 per year, and your employer can only allow you to roll over $500 of unused funds from one year to the next. That means you have to be careful in estimating how much you may spend on health care costs for the coming year.</p> <h2>4. Buy a House</h2> <p>Of course, there are other considerations than taxes when buying a house (like making sure you can actually <em>afford</em> to <a href="http://www.soundmindinvesting.com/visitor/2013/apr/level1.htm">buy a house</a>!), but you may be surprised to find that owning doesn't cost much more, if at all, than renting. That's because you can deduct mortgage interest and property taxes. Print a copy of <a href="http://www.irs.gov/uac/Schedule-A-(Form-1040),-Itemized-Deductions">Schedule A from the IRS</a>, add up your qualifying itemized deductions, and see if it comes to more than your standard deduction ($6,100 for individuals, $12,200 for married couples filing jointly). If so, plug those numbers into the estimates you ran earlier in figuring this year's tax bill and see how home ownership may impact your cash flow.</p> <h2>5. Shore Up Your Emergency Fund</h2> <p>Paying taxes can be painful enough. Paying tax penalties is even worse. And yet, the IRS took in $5.7 billion in <em>penalties</em> from people who withdrew money from their IRA or 401(k) before age 59&frac12;. Some of the early withdrawals can be chalked up to lack of knowledge about better alternatives, such as rolling over your balance penalty- and tax-free into an IRA when leaving your employer. Some of it is due to a lack of other savings. To avoid treating retirement savings as an emergency fund, <a href="http://www.wisebread.com/a-step-by-step-guide-to-creating-your-emergency-fund?ref=seealso">build a real emergency fund</a> by stocking a savings account (online banks typically pay the best interest) with three to six months' worth of essential living expenses.</p> <h2>6. Save for College</h2> <p>Finally, if you have a college-bound child, saving through a 529 plan <em>may</em> reduce your taxes. Every state offers such a plan. While there are no federal income tax deductions available for contributions, some states offer state tax benefits to residents who use their state's plan. Of those, some allow you to take deduction, which lowers your taxable income. Even better, some provide a tax credit, which lowers your tax bill dollar for dollar. Find out what your state offers by searching on the name of your state and &quot;529 plan&quot; or visit <a href="http://www.savingforcollege.com">www.savingforcollege.com</a>.</p> <p><em>What steps have you taken to make the tax laws work in your favor?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/6-tax-moves-you-need-to-make-right-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-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/why-one-third-of-americans-havent-saved-for-retirement">Why One-Third of Americans Haven&#039;t Saved for Retirement</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/if-you-want-your-401k-to-grow-stop-doing-these-6-things">If You Want Your 401K to Grow, Stop Doing These 6 Things</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/this-is-why-you-cant-postpone-planning-for-your-retirement-and-how-to-start">This Is Why You Can&#039;t Postpone Planning for Your Retirement (And How to Start)</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/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-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-unexpected-things-you-should-consider-when-picking-where-you-retire">10 Unexpected Things You Should Consider When Picking Where You Retire</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement Taxes retirement saving taxes Thu, 22 May 2014 08:12:26 +0000 Matt Bell 1140110 at http://www.wisebread.com Best Money Tips: Reduce Your Food Expenses http://www.wisebread.com/best-money-tips-reduce-your-food-expenses <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-reduce-your-food-expenses" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/groceries-5131294-small.jpg" alt="groceries" title="groceries" class="imagecache imagecache-250w" width="250" height="182" /></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 some great articles on reducing your food expenses, tax day freebies, and steps to investing in yourself.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.narrowbridge.net/5-ways-to-reduce-your-food-expenses/">5 Ways to Reduce Your Food Expenses</a> &mdash; To reduce your food expenses, buy in bulk and limit junk food. [NarrowBridge Finance]</p> <p><a href="http://www.savvysugar.com/Tax-Day-Freebies-2014-34563203">It's Time to Relax and Enjoy These 18 Tax Day Freebies</a> &mdash; This tax day, take advantage of free document shredding at Office Depot. [PopSugar Smart Living]</p> <p><a href="http://moneysmartlife.com/seven-steps-to-investing-in-yourself/">Seven Steps to Investing in Yourself</a> &mdash; Reviewing your career map and considering outsourcing are just a couple steps to investing in yourself. [Money Smart Life]</p> <p><a href="http://www.stretcher.com/stories/14/14apr07h.cfm">5 Spring Home Maintenance Projects</a> &mdash; This spring, inspect your roof and clean your gutters. [TheDollarStretcher.com]</p> <p><a href="http://christianpf.com/your-tax-refund-how-you-should-use-it-and-why-you-should-lose-it/">Your Tax Refund: How You Should Use It and Why You Should Lose It</a> &mdash; Consider using your tax refund to pay off your debt or save for retirement. [Christian PF]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.forbes.com/sites/dorieclark/2014/04/08/how-to-get-noticed-job-hunting-secrets-for-career-changers/">How to Get Noticed - Job Hunting Secrets For Career Changers</a> &mdash; Career changers would be wise to network your way into hidden or unadvertised jobs. [Forbes]</p> <p><a href="http://livingonthecheap.com/7-last-minute-tax-tips-for-procrastinators/">7 last-minute tax tips for procrastinators</a> &mdash; If you procrastinated on your taxes, get professional help if you need it. [Living on the Cheap]</p> <p><a href="http://cashmoneylife.com/roadblocks-to-investing/">Do You See Your Retirement Contributions as a Loss? Getting Past Roadblocks to Investing</a> &mdash; Remedy the loss aversion you feel when you invest by having money contributed to your retirement account before you see it in your checking account. [Cash Money Life]</p> <p><a href="http://onecentatatime.com/the-wonders-and-pitfalls-of-working-from-home/">The Wonders and Pitfalls of Working From Home</a> &mdash; Working from home can maximize your efficiency, but it can also increase distractions. [One Cent at a Time]</p> <p><a href="http://parentingsquad.com/easter-decorations-to-make-with-your-kids">Easter Decorations to Make With Your Kids</a> &mdash; You can make Easter egg centerpieces or a candy terrarium with your kids this Easter. [Parenting Squad]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/best-money-tips-reduce-your-food-expenses">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-11"> <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/the-best-5-credit-cards-for-groceries">The Best 5 Credit Cards for Groceries</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/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers">Don&#039;t Miss These 7 Great Tax Deductions for Parents and Caretakers</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/fresh-fruits-and-vegetables-by-the-month">Fresh Fruits and Vegetables, By the Month</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/breaking-the-bread-code-how-to-get-the-freshest-loaf">Breaking the Bread Code: How to Get the Freshest Loaf</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/get-a-bigger-refund-with-these-often-overlooked-tax-deductions">Get a Bigger Refund With These Often-Overlooked Tax Deductions</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes best money tips groceries Tue, 15 Apr 2014 09:24:15 +0000 Ashley Jacobs 1135285 at http://www.wisebread.com Filing Your Taxes for Free Online: How to Do It and What to Expect http://www.wisebread.com/filing-your-taxes-for-free-online-how-to-do-it-and-what-to-expect <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/filing-your-taxes-for-free-online-how-to-do-it-and-what-to-expect" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/laptop-476092861.jpg" alt="woman using laptop" title="woman using laptop" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p><em>Did you know you could file both your federal and state taxes for free if you earned $58,000 or less last year? MyFreeTaxes &mdash; offered through a national partnership between Goodwill Industries International, National Disability Institute, and United Way, and sponsored by the Walmart Foundation &mdash; provides free federal and state tax preparation and filing assistance, both online and in person, to individuals and families earning $58,000 or less a year. </em><a href="http://MyFreeTaxes.com"><em>MyFreeTaxes.com</em></a><em> is the only online platform that can be used to file both federal and state taxes in all 50 states and the District of Columbia. The program has helped millions of individuals and families file for free and claim more than $8 billion in tax credits and refunds since 2009. If you filed an extension or missed the tax deadline, </em><a href="http://MyFreeTaxes.com"><em>MyFreeTaxes.com</em></a><em> is available through October to help you file for free.</em></p> <p>Filing your taxes is easy. To take some of the mystery out of online filing, we've put together an overview on what people can expect when they prepare and file their own taxes through MyFreeTaxes.com.</p> <h2>Know That You Are Not Alone</h2> <p>If you have any questions, or need help along the way, call the MyFreeTaxes Helpline at 1-855-My-Tx-Help (1-855-698-9435) to speak with specialists that have been certified by the IRS.</p> <h2>Step 1: Be Prepared</h2> <p>Print off this&nbsp;<a href="http://www.myfreetaxes.com/get-organized">Tax Preparation Checklist</a>,&nbsp;which lists all of the documents you need to have when preparing your return. You will need the Social Security or Individual Taxpayer Identification Number (ITIN) for each family member. You'll also need your W-2s, 1099s, and other income forms that you should have received from your employer. If you have childcare expenses, make sure you have the provider name and address on hand as well.</p> <h2>Step 2: Get the Facts</h2> <p>When you visit <a href="http://www.MyFreeTaxes.com">MyFreeTaxes.com</a> you can use tools like the Earned Income Tax Credit (EITC) Calculator to see if you qualify for this valuable credit. Once you have your documents ready, click the yellow &quot;File Now&quot; button to begin the filing process.</p> <p><em>TIP: To make sure that you use the free MyFreeTaxes service instead of the paid H&amp;R Block&reg; service, start your return by clicking the yellow &quot;File Now&quot; button on the MyFreeTaxes website.</em></p> <p><em><img width="605" height="376" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-1-ggnoads.jpg" alt="" /></em></p> <h2>Step 3: Create an Account</h2> <p>For the smoothest filing process and to ensure that you receive the free service, create a new account for this year even if you have used H&amp;R Block to file a return in the past. Remember, the free service is only available if your adjusted gross income (AGI) was $58,000 or less in 2013. On the sign in page click &quot;Create Account.&quot;</p> <p><em>TIP: Write down your login information in a safe place so that you can access your return if you need to later on.</em></p> <p><em><img width="605" height="379" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-2-ggnoads.jpg" alt="" /></em></p> <h2>Step 4: Start Your Return</h2> <p>You're ready to start your return! First you'll enter basic information like your name and address. Then, you'll need to answer questions related to what may have changed in the last year (e.g. filing status, residency) so the filing software knows what appropriate forms to include.</p> <p><em>TIP: If you are filing jointly or will be adding family members or children to your return, make sure you have each individual's correct Social Security number or Tax Payer Identification number handy to save you time</em>.</p> <p><img width="605" height="436" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-3-ggnoads.jpg" alt="" /></p> <h2>Step 5: Enter Information From Your 2013 Tax Papers in the Online Form</h2> <p>The software will ask you to input information from your W-2 and other tax forms. For many of them, you simply need to match the numbered boxes on the tax form with the corresponding boxes online.</p> <p><em>TIP: Keep all of your 2013 tax documents in a neat pile on one side of the computer. After you enter the information from a form, move it to the other side of the computer so that you can see which forms you haven't entered yet.</em></p> <p><em><img width="605" height="370" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-4b-ggnoads.jpg" alt="" /></em></p> <p><em><img width="605" height="464" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-5-ggnoads.jpg" alt="" /></em></p> <h2>Step 6: Review Your Return</h2> <p>Prior to submitting your tax return you'll have the opportunity to review and claim applicable tax credits, as well as a final chance to review your entire tax return.</p> <p>Remember, if you have questions at any point when preparing and filing your taxes online through MyFreeTaxes.com, please call our toll-free helpline at 1-855-My-Tx-Help or use the online chat.</p> <p><em>TIP: Make sure to check that all 2013 tax forms have been entered into the system, as some determine your eligibility for valuable tax credits and deductions.</em></p> <p><em><img width="605" height="454" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-6-ggnoads.jpg" alt="" /></em></p> <h2>Step 7: Choose How to Receive Your Refund, and Then Submit Your Return</h2> <p>Taxpayers expecting a refund can choose to have their refund mailed to them or deposited directly into their bank account.</p> <p><em>TIP: The IRS recommends filers choose the direct deposit option so they get their money back quicker.</em></p> <p><em><img width="605" height="455" src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u784/Blog3-7-ggnoads.jpg" alt="" /></em></p> <h2>Step 8: Pat Yourself on the Back; You Just Prepared and Filed Your Own Taxes!</h2> <h2>Step 9: Check the Status of Your Refund</h2> <p>If you are expecting a refund, check the <a href="http://www.irs.gov/Refunds">IRS website</a> to see where you stand.</p> <h2>Step 10: Make the Most of Your Tax Refund</h2> <p>Here are some <a href="http://www.myfreetaxes.com/make-the-most-of-your-tax-refund/">great ways to use your tax refund</a>.</p> <h2>Step 11: Tell Your Friends and Family That They Don't Have to Pay to File Their Taxes!</h2> <p>You're not the only one who wants to save money by doing their taxes online.&nbsp;</p> <p><span style="font-size: 13px; line-height: 1.7em;">Now that you know what to expect, visit </span><a style="font-size: 13px; line-height: 1.7em;">MyFreeTaxes.com</a><span style="font-size: 13px; line-height: 1.7em;"> and </span><strong style="font-family: inherit; font-style: inherit; line-height: 1.7em;">file your taxes for FREE if you made $58,000 or less last year</strong><span style="font-size: 13px; line-height: 1.7em;">. It's safe, convenient, and easy.</span></p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p>&nbsp;This is a guest post from MyFreeTaxes.</p> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/myfreetaxes">MyFreeTaxes</a> of <a href="http://www.wisebread.com/filing-your-taxes-for-free-online-how-to-do-it-and-what-to-expect">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-12"> <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/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers">Don&#039;t Miss These 7 Great Tax Deductions for Parents and Caretakers</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/get-a-bigger-refund-with-these-often-overlooked-tax-deductions">Get a Bigger Refund With These Often-Overlooked 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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</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/8-ways-to-file-your-taxes-for-free-in-2015">8 Ways to File Your Taxes for Free in 2015</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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes Fri, 11 Apr 2014 00:30:29 +0000 MyFreeTaxes 1135177 at http://www.wisebread.com Get a Bigger Refund With These Often-Overlooked Tax Deductions http://www.wisebread.com/get-a-bigger-refund-with-these-often-overlooked-tax-deductions <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/get-a-bigger-refund-with-these-often-overlooked-tax-deductions" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/laptop-175580600.jpg" alt="woman with papers" title="woman with papers" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Everyone knows that there are only two things certain in life: death and taxes. When tax time looms its ugly head, most utter a groan and diligently file their returns. One could argue that the tax code is a confounding minefield purposely written to confuse and frustrate. The following deductions are underused (and perfectly legal) ways to ensure you keep as many of your hard earned dollars as possible. (See also: <a href="http://www.wisebread.com/stupid-tax-return-mistakes-that-will-get-you-audited?ref=seealso">Stupid Tax Return Mistakes</a>)</p> <p>Before deducting to your heart's content, remember to document everything. Keep your receipts and other proof so you don't find yourself in a pickle if the tax man comes knocking on your door. There may be limitations on your ability to claim these deductions. Consult a certified public accountant if you have any questions, concerns, or if you are completely out of your element.</p> <h2>1. Gambling</h2> <p>Who doesn't like a little misappropriation of personal funds? When you find yourself a few too many cocktails deep and sitting at the blackjack table with your inhibitions lowered, it's easy to lose your hard earned cash. Don't worry, Mr. Tax Man feels your pain.</p> <p>Whether you lingered at the roulette table for too long or have a penchant for quick pick lottery tickets, you can ask Uncle Sam to take pity on your wallet and deduct your losses. If it sounds too good to be true, that's because <a href="http://www.irs.gov/uac/Newsroom/Five-Important-Tips-on-Gambling-Income-and-Losses-1">there is a catch</a>. If you're going to claim gambling losses, you must report your winnings as well.</p> <p>As an added twist, you can only claim losses to the extent of your winnings. So if you pay $100 on scratch offs but only recoup $50, you can only claim $50 in losses; the other $50 is the price of playing the game.</p> <h2>2. Student Loan Interest</h2> <p>Those of you who are all too familiar with the crippling debt incurred from pursuing higher education know that the interest rates on student loans can be especially unforgiving. Before you start lamenting the money that hasn't even gone toward paying your premiums, the IRS is here to help ease the pain. (See also: <a href="http://www.wisebread.com/what-recent-grads-must-know-to-repay-federal-student-loans?ref=seealso">What Recent Grads Must Know To Repay Federal Student Loans</a>)</p> <p>Folks who are legally obligated to pay back their student loans can deduct the interest that they have paid in doing so. Even if you are lucky enough to have parents that repay your loans, you can still claim the interest paid since you are the one liable for the debt. The IRS even has a <a href="http://www.irs.gov/uac/Can-I-Claim-a-Deduction-For-Student-Loan-Interest%3F">handy 10 minute quiz</a> you can take to see if you're eligible.</p> <h2>3. Charitable Expenses</h2> <p>Most people are aware that charitable contributions to qualified organizations are deductible on your taxes, but the IRS's definition of &quot;charitable&quot; is somewhat of an ambiguous grey area. While you can't deduct the time you volunteer to charity, you can claim <a href="http://www.mainstreet.com/article/moneyinvesting/taxes/document-your-charitable-deductions-taxpayers?page=3">out-of-pocket expenses</a> you incur on your philanthropic adventures. Did you bake cookies for a school fundraiser? The ingredients are tax deductible. Did you attend a swanky charity ball? You can deduct the mileage it took to get there. (See also: <a href="http://www.wisebread.com/surprising-charitable-tax-deductions?ref=seealso">Surprising Charitable Tax Deductions</a>)</p> <p>There was even a woman who was able to deduct the cost of her babysitter because her work at a local charity made the sitter necessary, although this might be more trouble than it's worth since the IRS took her to court to justify the claim.</p> <h2>4. Gadgets and Technology</h2> <p>In a world where technology is king, keeping up with the latest gadgets can be mighty expensive. So it's a good thing that the government will step in to help offset some of the cost. If you use your phone or computer exclusively for business, you can claim 100% of the cost, including your monthly cell phone bill.</p> <p>If you use you use your smartphone to post pictures of your lunch to Instagram, don't fret. If your tech gizmo of choice acts as both your business and personal device, you can deduct the portion used for business from your taxable income.</p> <p>These tax breaks don't just include new PCs or the latest smartphone. Printers, Internet service, cable TV, and <a href="https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Deductions-and-Credits/Mobile-Phones--Internet-and-Other-Easy-Tax-Deductions/INF17751.html">more can be deducted</a>. Of course, you will be required to keep meticulous records if you are asked to substantiate your claims.</p> <h2>5. Searching for a Job</h2> <p>It makes sense that the IRS would want to help people find work; it's in their best interest to have you earning money so that you can pay the tax man. So it comes as no surprise that Uncle Sam is willing to give a little back when you find yourself neck deep in the dog-eat-dog world of job hunting. (See also: <a href="http://www.wisebread.com/6-tax-deductions-job-hunters-can-t-afford-to-overlook?ref=seealso">Tax Deductions for Job Hunters</a>)</p> <p>You can claim transportation costs such as gas, tolls, and parking; you can even write off printing expenses for resumes and business cards. But before you go too crazy, knot that the government has its share of restrictions. Your job search costs are considered miscellaneous expenses. As such you have to itemize all of your deductions, and they have to be more than 2% of your annual gross income.</p> <p>Of course there are <a href="http://www.marketwatch.com/story/deducting-jobhunting-expenses-1348080899718">other stipulations</a>, so make sure you do your homework.</p> <p><em>Do you know of any law-abiding taxation loopholes? Share your financial wizardry in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ryan-lynch">Ryan Lynch</a> of <a href="http://www.wisebread.com/get-a-bigger-refund-with-these-often-overlooked-tax-deductions">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-13"> <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/dont-miss-these-7-great-tax-deductions-for-parents-and-caretakers">Don&#039;t Miss These 7 Great Tax Deductions for Parents and Caretakers</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/7-ways-to-max-out-your-ira-contributions-by-april-15th">7 Ways to Max Out Your IRA Contributions by April 15th</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/surprise-5-reasons-you-might-not-get-your-tax-refund">Surprise! 5 Reasons You Might Not Get Your Tax Refund</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes deductions tax refund taxes Wed, 02 Apr 2014 08:36:11 +0000 Ryan Lynch 1133959 at http://www.wisebread.com Best Money Tips: Useful Things to Do With Your Tax Refund http://www.wisebread.com/best-money-tips-useful-things-to-do-with-your-tax-refund <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-useful-things-to-do-with-your-tax-refund" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cash-469820629.jpg" alt="coins" title="coins" class="imagecache imagecache-250w" width="250" height="156" /></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 some fantastic articles on useful things to do with your tax refund money, when renting makes more sense than buying, and reasons to use a cash-only spending plan.</p> <h2>Top 5 Articles</h2> <p><a href="http://www.thesimpledollar.com/ten-useful-things-to-do-with-your-tax-return-money/">Ten Useful Things To Do With Your Tax Return Money</a> &mdash; Fixing up your home and bolstering your emergency fund are just a couple good ways to use your tax refund money. [The Simple Dollar]</p> <p><a href="http://cashmoneylife.com/when-is-renting-better-than-buying/">Five Situations Where Renting Makes More Sense Than Owning a Home</a> &mdash; It makes more sense to rent when owning would leave you broke. [Cash Money Life]</p> <p><a href="http://www.stretcher.com/stories/07/07mar19b.cfm?slider">10 Reasons to Use a Cash-Only Spending Plan</a> &mdash; Using a cash-only spending plan helps you better learn the value of a dollar. [TheDollarStretcher.com]</p> <p><a href="http://ptmoney.com/travel-hacker-vacation-dollar-goes-furthest/">Not a Travel Hacker? Vacation Where and When Your Dollar Goes Furthest</a> &mdash; Save money when traveling by opting to stay away from touristy things and be more like a local. [PT Money]</p> <p><a href="http://www.carefulcents.com/make-room-for-your-side-business/">3 Ways to Harmoniously Blend Your Side Business Alongside Your Full-Time Job</a> &mdash; Negotiating with your boss for office freedom can help you blend your side business and full-time job. [Careful Cents]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.savvysugar.com/How-Feel-Like-Child-Again-24186170">16 Ways to Feel Like a Kid Again</a> &mdash; To feel like a kid again, make a mix CD or make s'mores. [PopSugar Smart Living]</p> <p><a href="http://livingonthecheap.com/want-summer-camp-deals-start-looking-now/">Want summer camp deals? Start looking now</a> &mdash; It is important to consider the type of camp experience you want for your child as well as what you can afford. [Living on the Cheap]</p> <p><a href="http://moneyning.com/investing/2-behavioral-biases-that-are-making-you-lose-money/">2 Behavioral Biases That Are Making You Lose Money</a> &mdash; Familiarity may be negatively affecting your portfolio and causing you to lose money. [MoneyNing]</p> <p><a href="http://parentingsquad.com/perfect-preschool-flower-crafts-to-brighten-up-your-home-this-spring">Perfect Preschool Flower Crafts to Brighten Up Your Home This Spring</a> &mdash; Consider making a flower bouquet canvas with your kids to brighten up your home. [Parenting Squad]</p> <p><a href="http://www.americandebtproject.com/2014/03/create-your-own-personalized-privacy-policy/">Create Your Own Personalized Privacy Policy</a> &mdash; Create your own personalized privacy policy can help protect yourself and your business. [American Debt Project]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-jacobs">Ashley Jacobs</a> of <a href="http://www.wisebread.com/best-money-tips-useful-things-to-do-with-your-tax-refund">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-14"> <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/get-a-bigger-refund-with-these-often-overlooked-tax-deductions">Get a Bigger Refund With These Often-Overlooked 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/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/surprise-5-reasons-you-might-not-get-your-tax-refund">Surprise! 5 Reasons You Might Not Get Your Tax Refund</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/what-are-your-chances-of-getting-audited-by-the-irs-your-guess-is-probably-wrong">What are your chances of getting audited by the IRS? Your guess is probably wrong</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-afford-to-pay-the-irs">Can&#039;t Afford to Pay the IRS?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes best money tips tax refund taxes Tue, 25 Mar 2014 10:00:18 +0000 Ashley Jacobs 1132789 at http://www.wisebread.com Turn Last Year's Taxes Into This Year's Financial Spring Cleaning http://www.wisebread.com/turn-last-years-taxes-into-this-years-financial-spring-cleaning <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/turn-last-years-taxes-into-this-years-financial-spring-cleaning" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/finances-466009147.jpg" alt="finances" title="finances" class="imagecache imagecache-250w" width="250" height="167" /></a> </div> </div> </div> <p>It's tax time again, the time of year when Americans sift through the pile of papers on or near (and sometimes in) their filing cabinets in search of those elusive tax documents. Where'd the W-2s go? What happened to the 1099 from the bank?</p> <p>It's also the time of year we promise to do a better job sorting and filing for next year's taxes. Make this year the year you keep that promise. Or take it a step further and make tax time an opportunity to look ahead, financially speaking, rather than only look back at last year. After all, you probably have a clearer picture of your current financial situation right after doing your taxes than at any other time.</p> <p>Let's start with the tax documents, and then let's look at what else we can tidy up.</p> <h2>Wrangle Your Tax Documents</h2> <p>All that stuff you spent the day tracking down? Keep it in one place for next year. Include a <a href="http://www.irs.com/articles/tax-form-checklist">checklist</a> so you can keep track of documents as you receive them &mdash; or to know what to go looking for if you haven't. Also include on your checklist some personal info: Names, Dates of Birth, Social Security numbers for you, your spouse or partner, and every dependent you claim. These details will be handy for all sorts of other purposes, too.</p> <h3>Make a Simple Two Folder System for the Key Documents</h3> <p>Make one folder for all of your income documents such as W-2s from employers, 1099s for contract work, for interest income, gambling winnings, income from investment sales, rental income, whatever. Refer to your checklist!</p> <p>Make a second folder for your income adjustments and credits. Mortgage interest is the big one here, but there are lots &mdash; IRA contributions, charitable contributions, education expenses. As you receive receipts and statements for these, just drop them in your folder. Next March or April you'll be ready to go, and probably feeling proud of your sensible filing.</p> <h3>Consider Digital Files</h3> <p>Lots of financial institutions give us the option to receive digital copies of our statements and tax documents &mdash; various 1099s for instance, or the 1098 for interest paid on student loan debt. It's cheaper for them, and it cuts down on paper waste. As you receive these, save them in specific folders on your computer (say, &quot;Income&quot; and &quot;Credits&quot;). They'll be waiting for you at tax time next year.</p> <p>Every year when I'm doing my taxes I have to run out to the garage to take a look at annual car registration fees paid for each of our two cars. This year I've taken snapshots of the renewal documents with my smartphone and uploaded them to Evernote. (I could have just added them to my &quot;Income Adjustments&quot; folder, too.) Next year I won't have to run out to the car. I've done the same with my property tax bills. You can do this for any paper receipts you receive and would like to keep for tax purposes.</p> <p><strong>Note:</strong> Many institutions will charge a fee to access older statements. Check with your bank or lender. If you need to keep copies of these records for your taxes or for retention, be sure to download them and store them safely (whether digitally or as print outs) &mdash; and don't forget to back them up.</p> <h3>Reconsider Your Withholding</h3> <p>Most personal finance gurus advise against too much income withholding. Despite that, on average, <a href="http://money.cnn.com/2012/01/10/pf/taxes/tax_refund/">Americans withhold an extra $3,000</a> in income tax every year &mdash; $250 a month. While it's nice to get a $3000 check every spring, it's not the smartest use of <em>your</em> money. It's not even the smartest way to get a $3000 &quot;bonus&quot; every year.</p> <p>With the details fresh in your mind after finishing your taxes, visit the <a href="http://www.irs.gov/Individuals/IRS-Withholding-Calculator">IRS' Withholding Calculator </a>and figure out how much you should be sending the government out of every paycheck to bring that refund closer to $500. When you ask HR to make the change, also ask that they redirect the same amount into a savings account. You won't notice much, if any, change on your paystub, but you will have a growing savings account &mdash; one that's earning interest.</p> <h2>Create a Basic File System</h2> <p>I've outlined a simple two-folder file system for your taxes above. If you don't already have a file system for the rest of your Important Documents, consider setting one up.</p> <p>In addition to my two tax folders, I keep several folders for my freelance work as a writer and editor (basically income and expense), and for the household I keep folders for:</p> <ul> <li>insurance policies (life, homeowner's, auto, earthquake, flood [beach living!])<br /> &nbsp;</li> <li>home maintenance receipts for repairs and supplies, as well as for major appliances<br /> &nbsp;</li> <li>bills paid<br /> &nbsp;</li> <li>bank and credit card statements (only recently went paperless)<br /> &nbsp;</li> <li>mortgage documents<br /> &nbsp;</li> <li>passports and Other Important Stuff like SS cards, birth certificates, diplomas, etc.</li> </ul> <h2>Start Budgeting</h2> <p>You have all the details on your income. And some of the details on your spending. Why not expend a little more effort <a href="http://www.wisebread.com/build-a-better-budget-in-5-minutes-flat">to create a budget</a>? Most banks now offer robust online tools for tracking spending on credit cards and to monitor income and spending made through checking, and savings accounts. That's a good start. You can take it a step further by using a service such as <a href="https://www.manilla.com/">Manilla</a> to consolidate and monitor all your bills and help you track your spending.</p> <h2>Evaluate Your Retirement Savings</h2> <p>Can you save more? Can you make a contribution now, before you file, and repay your savings or checking account with your refund? You'll get a break on your taxes, and you will have done something nice for your future self.</p> <p>Now is also a good time to rebalance your funding allocation between riskier stocks and safer bonds. Depending on the performance of your portfolio over the last year, gains (or losses) have changed the balance of your investment, most likely toward riskier stocks, which may or may not be in alignment with your investment goals and risk tolerance.</p> <h2>Evaluate Your Debt</h2> <p>If you're like most Americans, you're carrying at least a little credit card debt. Maybe a lot. Do you know how much interest you're paying? Do you have a plan for paying that balance off?</p> <p>Get a handle on those details and start figuring out how to get away from that debt. A good first step is to commit some of your refund to those balances.</p> <h2>Check Your Credit Report</h2> <p>Speaking of credit. You're entitled to one free look at your credit report from each of the three major credit bureaus every year. Don't visit one of those services that advertise on TV with the catchy jingles (they'll try to sell you some other services you may not need). Just go to the only <a href="https://www.annualcreditreport.com/index.action">annual credit report website</a> authorized by <a href="http://www.consumer.ftc.gov/articles/0155-free-credit-reports">federal government</a> to provide consumers with reports from the leading bureaus. Find anything amiss? Learn how to correct <a href="http://www.consumerfinance.gov/askcfpb/313/what-should-i-look-for-in-my-credit-report-what-are-a-few-of-the-common-credit-report-errors.html">credit reporting errors</a>.</p> <p>For more tips on<em> </em>Financial Spring Cleaning, join me and our Senior Editor, Meg Favreau, as well as Kristen Chase of Cool Mom Picks and Marc Karasu of Manilla on <strong>Wednesday, March 26 at 3:30pm ET</strong> for a <a href="https://plus.google.com/events/c3f26hh8k3dsmi44tg54f1ns8lg">Google+ Hangout</a>. The Hangout will answer questions about how to de-clutter and organize your financial life this spring. Whether you&rsquo;re trying to get your financial paperwork in order to prepare your taxes, or want to do some financial spring cleaning in order to simplify your life, the conversation will provide participants with helpful tips, tricks and digital tools to be more productive, get control of your money, and start spring on a fresh financial note.</p> <p><em> </em></p> <p><em><a href="http://r1.fmpub.net/?k1=cmx-metric&amp;k2=289|10&amp;k3=logo&amp;k4=&amp;r=http%3A%2F%2Fwww.citi.com%2Fmobile"><img src="http://vc.cdn.fm/video_conversationalist/system/published/opportunity/8758310/Citi_Logo_125x125.jpg" alt="" /></a></em></p> <p><em>This post is brought to you by Citi. Learn more about the tools Citi offers to help simplify your financial life at <a rel="nofollow" href="http://r1.fmpub.net/?k1=cmx-metric&amp;k2=289%7C10&amp;k3=disclaimer&amp;k4=&amp;r=http%3A%2F%2Fatwww.citi.com%2Fmobile">www.citi.com/mobile</a>.&nbsp;</em></p> <p><em>This content is not provided or commissioned by Citi. Opinions expressed here are author&rsquo;s alone, not those of Citi, and have not been reviewed, approved or otherwise endorsed by Citi.</em></p> <p><img width="0" height="0" src="http://r1.fmpub.net/?k1=cmx-metric&amp;k2=289|10&amp;k3=&amp;k4=&amp;img=true" alt="" /><img width="0" height="0" src="http://ap.lijit.com/www/delivery/retarget.php?p=FMC&amp;add_c87583=1&amp;add_s289=1&amp;add_n101=1" alt="" /><img width="0" height="0" src="http://pixel.mathtag.com/event/img?mt_id=336069&amp;mt_adid=115091&amp;v2=s289&amp;v3=n101&amp;s1=c87583" alt="" /></p> <p>&nbsp;</p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/lars-peterson">Lars Peterson</a> of <a href="http://www.wisebread.com/turn-last-years-taxes-into-this-years-financial-spring-cleaning">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-15"> <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/surprise-5-reasons-you-might-not-get-your-tax-refund">Surprise! 5 Reasons You Might Not Get Your Tax Refund</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/what-if-i-skip-my-taxes-this-year">What If I Skip My Taxes This Year?</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/how-to-survive-a-tax-audit">How to Survive a Tax Audit</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/irs-delays-start-of-tax-filing-for-some-taxpayers-in-2011">IRS Delays Start of Tax Filing for Some Taxpayers in 2011</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/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> </ul> </div> </div> </div> </div><br/></br> Taxes federal taxes files filing taxes financial planning Tue, 18 Mar 2014 10:24:11 +0000 Lars Peterson 1131591 at http://www.wisebread.com