Taxes http://www.wisebread.com/taxonomy/term/4811/all en-US 4 Green Home Rebates That Save You Big in 2015 http://www.wisebread.com/4-green-home-rebates-that-save-you-big-in-2015 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-green-home-rebates-that-save-you-big-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/solar_panels_000016723163_0.jpg" alt="Solar panels are green energy option for home rebate" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For the first time, I'm beginning to seriously consider buying a home and I'm deep into the research and learning phase. One of the aspects I'm most intrigued by these days is how to perform a &quot;green&quot; renovation on an existing home. I've been happy to learn that there are multiple green rebates and credits that you can use in 2015 toward specific green improvements.</p> <h2>1. Geothermal Heat Pumps</h2> <p>Not surprisingly, energy consumption is one of the key areas that benefit from tax credits. <a href="http://www.energystar.gov/about/federal_tax_credits/geothermal_heat_pumps">Geothermal heat pumps</a> are renewable energy appliances that are not only good for the environment, but also an incredibly comfortable way to heat and cool your home. These heat pumps utilize the ground to generate hot water, heat, and air conditioning, unlike traditional heat pumps which utilize air. Geothermal heat pumps are more efficient &mdash; and therefore less expensive &mdash; to run than traditional heat pumps.</p> <h2>2. Small Wind Turbines</h2> <p>Windmills may conjure visions of Holland or Don Quixote. But they should also give you visions of green, as in green energy and green back in your pocket. <a href="http://www.energystar.gov/about/federal_tax_credits/small_wind_turbines">Small wind turbines</a> convert kinetic wind energy into electricity that connects to your home's electrical system, and homeowners enjoy significant tax credits for their implementation</p> <h2>3. Solar Energy Systems</h2> <p>Solar energy systems have undergone significant innovation over the years, making them more efficient and less expensive than when they first appeared on the residential energy scene. In terms of tax rebates, there are two types of <a href="http://www.energystar.gov/about/federal_tax_credits/solar_energy_systems">solar energy systems</a> that qualify: solar water heaters and solar panels that convert sunlight into electricity. (See also: <a href="http://www.wisebread.com/cut-your-electric-bill-with-solar-panels?ref=seealso">Cut Your Electric Bill With Solar Panels</a>)</p> <h2>4. Fuel Cells</h2> <p>Of all of the green home rebates, the <a href="http://www.energystar.gov/about/federal_tax_credits/fuel_cells">fuel cell</a> is the newest kid on the block. Fuel cells take advantage of the emerging hydrogen economy to power cars and other consumer goods that have traditionally been powered by fossil fuels. They offer a much cleaner alternative to fossil fuels.</p> <p>While these are the formal green home rebates offered by the federal government, there are plenty of other ways to save money (and the environment) with improvements to your home. ENERGY STAR offers an online <a href="https://www.energystar.gov/index.cfm?fuseaction=HOME_ENERGY_YARDSTICK.showGetStarted">Home Energy Yardstick</a> that will help you determine the energy efficiency of your home as it currently stands, and will make suggestions for ways to improve it.</p> <p>These improvements include better insulation and sealing, ENERGY STAR appliances and proper use of light fixtures, and even changes as simple as installing drapes, storm windows, and programmable thermostats. While these improvements don't carry tax rebates, they will help lower your energy costs without compromising your comfort. Good for you, good for the planet.</p> <p><em>How have you made your home more &quot;green&quot;? </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/4-green-home-rebates-that-save-you-big-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-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/10-frugal-ways-to-keep-your-home-warm-this-winter">10 Frugal Ways to Keep Your Home Warm This Winter</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/how-much-money-will-you-save-with-energy-star-appliances">How Much Money Will You Save With Energy Star Appliances?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-simple-ways-to-make-your-refrigerator-more-efficient">8 Simple Ways to Make Your Refrigerator More Efficient</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-cheap-and-easy-homemade-mosquito-repellents">4 Cheap and Easy Homemade Mosquito Repellents</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/youre-washing-your-clothes-too-often-what-to-do-instead">You&#039;re Washing Your Clothes Too Often! (What to Do Instead)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Green Living Home Taxes eco friendly energy efficiency rebates renovations solar tax credits wind Wed, 22 Apr 2015 17:00:09 +0000 Christa Avampato 1392475 at http://www.wisebread.com Best Money Tips: How to Prep for Next Year's Taxes http://www.wisebread.com/best-money-tips-how-to-prep-for-next-years-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/best-money-tips-how-to-prep-for-next-years-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_doing_taxes_000028462002.jpg" alt="Couple taking time to prep for next year&#039;s taxes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Welcome to Wise Bread's <a href="http://www.wisebread.com/topic/best-money-tips">Best Money Tips</a> Roundup! Today we found some great articles on ways to prep for next year&rsquo;s taxes, how to know when it&rsquo;s time to move, and a three-step plan to overcome any negative situation.</p> <h2>Top 5 Articles</h2> <p><a href="http://blog.mint.com/tax-tips/taxes-done-5-ways-to-prep-for-next-year41615">Taxes Done? 5 Ways to Prep for Next Year</a> &mdash; Make a checklist of the documents you needed for your taxes this year. Odds are, you'll need them again next year! [Mint Life]</p> <p><a href="http://www.yoursmartmoneymoves.com/2015/04/16/how-do-you-know-when-it-is-time-to-move/">How Do You Know When It Is Time To Move?</a> &mdash; Are you spending over 30% of your income on mortgage and upkeep? If so, it might be time to change your housing situation to something more affordable. [Your Smart Money Moves]</p> <p><a href="http://www.pickthebrain.com/blog/ultimate-3-point-plan-overcoming-negative-circumstances/">The Ultimate 3 Point Plan to Overcoming ANY Negative Circumstances</a> &mdash; Start by detaching for your circumstances and focusing instead on your energy. [Pick the Brain]</p> <p><a href="http://www.popsugar.com/smart-living/How-Many-Wears-Before-You-Need-Wash-28694036">How Many Wears Before You Need to Wash</a> &mdash; Generally, blazers and jackets can go five to six wears before a wash is in order. [PopSugar Smart Living]</p> <p><a href="http://moneyontrees.ca/5-ways-volunteering-can-boost-your-career/">5 Ways Volunteering Can Boost Your&nbsp;Career!</a> &mdash; Volunteering gives you valuable work experience, which is especially useful if you're just starting out. [Money On Trees]</p> <h2>Other Essential Reading</h2> <p><a href="http://www.savingadvice.com/articles/2015/04/15/1033814_common-credit-report-errors.html">Common Ways Errors Get on Your Credit Report</a> &mdash; Credit bureaus often use partial name or partial SSN matches to find information about an individual, so people with similar names or Social Security Numbers may have their identities mistakenly matched. [Saving Advice]</p> <p><a href="http://www.everybodylovesyourmoney.com/2015/04/15/5-popular-work-from-home-ideas.html">5 Popular Work From Home Ideas</a> &mdash; A good starter job for people who want to work from home is data entry, which may include transcribing audio, entering catalog information into a program, and recording payroll. [Everybody Loves Your Money]</p> <p><a href="http://www.thadthoughts.com/2015/04/seven-tips-for-working-with-a-new-boss">Seven Tips for Working With a New Boss</a> &mdash; Learn what you can about your new boss. What was their work experience, where did they live, and where did they go to school? [Thad Thoughts]</p> <p><a href="http://www.girlsjustwannahavefunds.com/4-spring-essentials-you-need-desperately/">4 Spring Essentials You Need Desperately</a> &mdash; It's wedding season! If you need formalwear, look for quality fabrics and construction and don't get too trendy. You probably want to be able to wear it again without looking too dated. [Girls Just Wanna Have Funds]</p> <p><a href="http://parentingsquad.com/what-parents-need-to-know-about-accidental-poisoning">What Parents Need to Know about Accidental Poisoning</a> &mdash; If you think the poisoning happened by inhalation, get the poison victim to fresh air ASAP. If it was through skin contact, remove any clothing and rinse with water for 15-20 minutes. [Parenting Squad]</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amy-lu">Amy Lu</a> of <a href="http://www.wisebread.com/best-money-tips-how-to-prep-for-next-years-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/4-green-home-rebates-that-save-you-big-in-2015">4 Green Home Rebates That Save You Big 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/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/filed-an-extension-heres-what-you-need-to-know">Filed an Extension? Here&#039;s What You Need to Know</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/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-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 best money tips tax prep Fri, 17 Apr 2015 19:00:07 +0000 Amy Lu 1392242 at http://www.wisebread.com Filed an Extension? Here's What You Need to Know http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/filed-an-extension-heres-what-you-need-to-know" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_filing_taxes_000044029242.jpg" alt="Woman filing tax extension and finding out what she needs " title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When the taxman cometh, it's already too late.</p> <p>Ignoring your federal taxes is never a good idea. Even though the IRS is suffering from budget cuts, the agency will still diligently calculate all applicable fees and penalties delinquent taxpayers owe.</p> <p>Struggling taxpayers may feel that they have no options available. The reality is that the IRS offers several options for people needing a filing extension or having difficulties meeting their tax obligations. Here are six steps that you can take to lessen the tax blow.</p> <h2>1. Double Check for Automatic Filing Extensions</h2> <p>Not all late tax filers fail to meet the deadline on purpose. Some of us have legitimate reasons, such as military deployment, that render us unable to pay our taxes on time. The IRS grants an automatic filing extension to the following groups:</p> <ul> <li>U.S. citizens and green card holders abroad. When living and working abroad, you have until June 16th to file your federal taxes. However, payment of taxes is still due April 15th.<br /> &nbsp;</li> <li>Members of the armed forces serving in <a href="http://www.irs.gov/uac/Combat-Zones">combat zones</a>. As an active member of the U.S. Armed Forces, you can wait until at least 180 days after you leave the combat zone to file returns and pay any taxes due. For more details, refer to the Extensions of Deadlines in Publication 3, <a href="http://www.irs.gov/pub/irs-pdf/p3.pdf">Armed Forces' Tax Guide</a>.<br /> &nbsp;</li> <li>Victims of certain recent natural disasters<strong>.</strong> Check this list from the IRS for approved <a href="http://www.irs.gov/uac/Tax-Relief-in-Disaster-Situations">tax relief for disaster situations</a>, such as the March 2014 mudslide in Washington and Hurricane Sandy.</li> </ul> <h2>2. File an Extension</h2> <p>If you aren't part of any of the three groups who enjoy automatic filing extensions, you can use the <a href="http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free">Free File service</a> from the IRS to electronically request an automatic tax-filing extension on <a href="http://www.irs.gov/pub/irs-pdf/f4868.pdf">Form 4868</a>. This extends your filing extension to October 15th.</p> <p>Don't underestimate the late filing penalty. It's 5% of the amount due for each month (or part of a month) your return is late. The maximum penalty is 25%. For returns 60 days late, the minimum penalty is $135 or the balance of the tax due on your return, whichever is smaller.</p> <p>If you feel that you have a valid reason for filing late, attach a statement to your return. In some cases, the IRS may waive the late filing fee.</p> <h2>3. Minimize Late Payment Fees</h2> <p>While you get an extension for filing taxes, your deadline to pay due taxes is still April 15th.</p> <p>The good news is that by filing an extension before or on April 15th, now you only pay a monthly penalty of half of 1% of any tax not paid by April 15th, instead of the default 5%.</p> <p>You don't have to pay late penalty fees if you can prove reasonable cause for paying taxes late. According to the IRS, if you pay at least 90% of your actual 2014 tax liability by April 15th, then you have reasonable cause and won't be charged late penalty fees. Paycheck withholdings, estimated tax payments, and payments made with Form 4868 count towards that 90%.</p> <p>Now that you have minimized late filing and late payment fees, let's tackle that debt to Uncle Sam.</p> <h2>4. Set Up an Online Payment Agreement</h2> <p>If you owe $50,000 or less in combined individual income tax, penalties, and interest, have filed all required returns, and can pay the full debt within 120 days, you're eligible to apply for an <a href="http://www.irs.gov/Individuals/Online-Payment-Agreement-Application">online payment agreement</a> with the IRS.</p> <p>To apply you'll need:</p> <ul> <li>Your name</li> <li>Valid email address</li> <li>Address from most recently processed tax return</li> <li>Date of birth</li> <li>Filing status</li> <li>Your SSN (or spouse's if filed jointly) or ITIN</li> </ul> <p>The IRS charges no fee to file this short extension of time to pay. Generally, taxpayers that are granted the 120-day extension pay less in penalties and interest that those that request longer payment agreements.</p> <h2>5. Request an Installment Agreement</h2> <p>Depending on how much you owe to the IRS, you may not be able to pay your debt within 120 days. In that case, you need to request an installment agreement through <a href="http://www.irs.gov/pub/irs-pdf/f9465.pdf">Form 9465, Installment Agreement Request</a> and <a href="http://www.irs.gov/pub/irs-pdf/f433f.pdf">Form 433-F, Collection Information Statement</a>.</p> <p>Here are some important points to consider about installment agreements:</p> <ul> <li>The standard fee to set up an installment agreement is $120; $52 if you agree to automatic payment withdrawal from your bank account, or $43 if your income is below a certain level.<br /> &nbsp;</li> <li>To avoid default, pay your minimum monthly payment by its due date.<br /> &nbsp;</li> <li>If your agreement goes into default, you may be charged a reinstatement free.<br /> &nbsp;</li> <li>Include your name, mailing address, Social Security number, daytime phone number, and return type on each one of your payments.<br /> &nbsp;</li> <li>Your entire balance is due within 72 months.<br /> &nbsp;</li> <li>Any future refunds will be automatically applied towards your balance until you pay your debt.<br /> &nbsp;</li> <li>Even if you have future refunds, continue to make your scheduled payments.<br /> &nbsp;</li> <li>If you move and have an unpaid balance, notify the IRS with <a href="http://www.irs.gov/file_source/pub/irs-pdf/f8822.pdf">Form 8822, Change of Address</a> to avoid missing any bills or notices from the IRS.</li> </ul> <p>Keep in touch with the IRS. Contact the agency at 1-800-829-1040 if you have any questions about any bill or notice, or if you know that you won't be able to meet a minimum monthly payment.</p> <h2>6. Last Resort: Payment Extension or Offer in Compromise</h2> <p>When you feel that you're running out of options, you still have two final courses of action.</p> <p>First, in the event that you feel that you have an undue hardship, meaning you would sustain a substantial financial loss if forced to pay a tax or deficiency on the due date, you can submit <a href="http://www.irs.gov/pub/irs-pdf/f1127.pdf">Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship</a>.</p> <p>Under the <a href="http://www.irs.gov/uac/New-IRS-Fresh-Start-Initiative-Helps-Taxpayers-Who-Owe-Taxes">IRS Fresh Start Initiative</a>, qualifying individuals can request an extension of time to pay and have late payment penalties removed. The IRS generally limits payment extensions to six months, except under very special circumstances.</p> <p>Second, in the very worst case scenario that you can't commit to an installment agreement and that you feel that a time extension wouldn't be helpful, you can submit <a href="http://www.irs.gov/pub/irs-pdf/f656b.pdf">Form 656, Offer in Compromise</a>.</p> <p>Under this scenario, the IRS would settle your tax debt in a lump sum totaling less than you owe. To help determine your eligibility, use the IRS's <a href="http://irs.treasury.gov/oic_pre_qualifier/">Offer in Compromise Pre-Qualifier</a>. Keep in mind that the IRS requires all Form 656 applicants a non-refundable $186 application fee and an upfront, non-refundable partial payment.</p> <p>Form 656 should be your very, very last resort because the IRS approves few offers in compromise.</p> <h2>Act Now</h2> <p>Take your tax obligations seriously. If you cannot make a payment, contact the IRS immediately. Unless you notify the IRS about why you can't meet a payment, the organization is legally allowed some pretty nasty enforced collection actions, such as seizing your property until you pay your tax debt.</p> <p>There is no tax beast that can't be tamed.</p> <p><em>How did you deal with your biggest tax bill?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">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/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-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/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/forgiven-debt-isnt-really-forgiven-at-all">Forgiven Debt Isn&#039;t Really Forgiven At All</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-file-your-taxes-for-free-in-2015">8 Ways to File Your Taxes for Free in 2015</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes agreements automatic filing deadlines IRS late taxes tax extension Thu, 16 Apr 2015 21:00:28 +0000 Damian Davila 1388387 at http://www.wisebread.com 8 Tax Return Mistakes Even Smart People Make http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-tax-return-mistakes-even-smart-people-make" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/taxes_000032707004.jpg" alt="Smart woman making mistakes while filing her taxes" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It can happen to the best of us.</p> <ul> <li>Former Treasury Secretary Timothy Geithner failed to pay nearly $35,000 in Social Security and Medicare payroll taxes from 2001 through 2004.<br /> &nbsp;</li> <li>Five-time Grammy winner Lauryn Hill served prison time for owing roughly $2.3 million in taxes.<br /> &nbsp;</li> <li>Hollywood star Christina Ricci owed unpaid taxes close to $200,000 back in 2008.</li> </ul> <p>Whether intentional or unintentional, tax return mistakes have big consequences. Here are eight of the most common that you have to pay special attention to.</p> <h2>1. Waiting Too Long</h2> <p>More than <a href="http://www.irs.gov/Refunds/What-to-Expect-for-Refunds-This-Year">90% of IRS refunds</a> are issued in less than 21 days, but the 2015 tax season may feature longer refund wait times. This year the IRS is hit with a triple whammy: a smaller budget, greater costs, and increased tax complexity. Remember that 2015 is the first year the IRS will administer the premium tax credits and individual mandates under the Affordable Care Act.</p> <p>Waiting until the last minute to file your taxes increases your chances of waiting longer than necessary for a refund. According to the IRS, one third of Americans wait until the last minute to file taxes. The longer that you wait, the longer that your tax refund (if you're expecting one!) is going to take. So, stop procrastinating and get it over with already.</p> <h2>2. Filing on Paper</h2> <p>IRS Commissioner John Koskinen has already gone on the record that the <a href="http://www.usatoday.com/story/opinion/2015/02/12/irs-commissioner-john-koskinen-qa-editorial-board/23309595/">level of taxpayer service</a> people can expect is not going to be very good this year. The Commissioner has a special warning for those filing their tax returns the old fashioned way: People filing paper tax returns could wait an extra week or longer for their refund than those who file electronically. Paper returns are handled by an actual person, and this year the IRS simply has less staff available.</p> <p>Besides, people doing their <a href="http://www.irs.gov/uac/Newsroom/Eight-Common-Tax-Mistakes-to-Avoid">taxes on paper</a> are about 20 times more likely to make an error than e-filers. Errors in addition or subtraction are very common on paper forms and can delay processing times. Other common places for math errors are the worksheets included in some forms. The IRS asks filers to pay special attention when figuring out their Earned Income Tax Credit, Child and Dependent Care Credit, and standard deduction.</p> <p>The fastest way to get your refund is to file electronically. If your tax declaration has no issues, your refund gets processed automatically.</p> <h2>3. Making Math and Data Entry Mistakes</h2> <p>Even when using a tax software program, you can still make math mistakes. While the software can add, subtract, and transfer amounts across forms, you still need to input the right amounts.</p> <p>The most common of data entry errors is the transposition mistake. This happens when two digits in a larger number are reversed. For example, your W2 form may say $54,000, but you incorrectly put $45,000 into the software. Avoid this problem by double checking any time that you input an amount.</p> <p>Pay particular attention when entering your bank's routing and account numbers for tax refunds by direct deposit. In the event that you enter an account or routing number that belongs to someone else, and the designated financial institution accepts the deposit, you must work directly with that financial institution to recover your funds. The <a href="http://www.irs.gov/Individuals/Frequently-Asked-Questions-about-Splitting-Federal-Income-Tax-Refunds">IRS assumes no responsibility</a> for this type of error.</p> <h2>4. Using Wrong Names</h2> <p>Just like numbers, names matter on tax forms. Your name, your spouse's, and your dependents' need to match the tax identification number the Social Security Administration has on file. Any mismatch could cause delays in processing time.</p> <p>If you legally change your name because of marriage, divorce, court order, or any other reason, you need to apply for a new Social Security card in order to use your new name on a tax form. Getting an updated SSN card is free and can be completed via email or at your local Social Security office.</p> <h2>5. Forgetting Signatures</h2> <p>An unsigned tax return is not valid. Be aware that both spouses must sign a joint tax return. When filing your paper return, make sure to gather all necessary signatures before mailing it out. Don't forget to include the date next to the signatures.</p> <p>Any tax software requires you to sign using a personal identification number. The tax software should explain the e-signature process to you, or you can get your <a href="http://www.irs.gov/Individuals/Electronic-Filing-PIN-Request">electronic filing PIN</a> on your own. Either way, you'll need the Adjusted Gross Income from your original (not any amended) last year's federal tax return.</p> <h2>6. Failing to Ask for an Extension for Payment by April 15th</h2> <p>Uncle Sam is one guy that you don't want to owe money to. From wage garnishments to liens on your properties, the IRS has a scary arsenal of debt collection tactics. The first step in solving your tax payment problems is to file on time and request a filing extension with <a href="http://www.irs.gov/pub/irs-pdf/f4868.pdf">IRS Form 4868 </a>by midnight on April 15th.</p> <p>This way you only pay a monthly penalty of half of 1% of any tax that you owe, instead of 5%. If you can show reasonable cause for not paying on time, attach a statement to your return explaining the reason. In some cases, the IRS may waive the late penalty payment. Also, even if you can't pay in full at the time of filing, try to pay as much as possible to minimize fees.</p> <p>No matter what your circumstances are, make sure to file federal taxes by the April 15th deadline. Then, work out how to pay the remaining balance to the IRS. (See also: <a href="http://www.wisebread.com/cant-pay-your-taxes-heres-what-to-do?ref=seealso">Can't Pay Your Taxes? Here's What to Do</a>)</p> <h2>7. Paying for Tax Preparation</h2> <p>Certain taxpayer groups are eligible for free tax return preparation.</p> <ul> <li><a href="http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers">Volunteer Income Tax Assistance</a>: People making $53,000 or less per year, persons with disabilities, seniors, and limited English-speaking taxpayers can get free basic income tax return preparation from IRS-certified individuals. Call 1-800-906-9887 for more information.<br /> &nbsp;</li> <li><a href="http://www.irs.gov/Individuals/Tax-Counseling-for-the-Elderly">Tax Counseling for the Elderly</a>: Individuals age 60 or older can receive free tax help and assistance.<br /> &nbsp;</li> <li><a href="http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free">IRS Free File</a>: Any taxpayer with an adjusted gross income of $60,000 or less can file federal taxes for free. Some state returns are available and some are free.<br /> &nbsp;</li> <li>On-campus tax prep: During tax season, many colleges and universities offer <a href="http://www.thespectrum.com/story/news/local/2015/03/26/tax-help-young-adults/70516242/">free tax prep services</a> for qualifying students.</li> </ul> <p>However, if you're a small business owner or self-employed, you should consider hiring a professional. If you use Schedule C, you're almost three times more likely than a corporation to <a href="http://www.reuters.com/article/2012/02/28/us-yourmoney-freelancing-irsaudit-idUSTRE81R1QR20120228">receive an audit</a>. Any &quot;creative accounting&quot; that can't be proved gets slapped with a 25% inaccuracy penalty from the IRS on top of any applicable taxes and interest. Better safe than sorry. (See also: <a href="http://www.wisebread.com/4-times-you-should-splurge-and-hire-a-pro?ref=seealso">4 Times You Should Splurge and Hire a Pro</a>)</p> <h2>8. Not Filing Taxes When Living Abroad</h2> <p>The IRS is very clear in that any U.S. citizen or green card holder is subject to U.S. federal income tax whether he or she is in the U.S. or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.</p> <p>The rules for state income taxes for U.S. citizens and green card holders abroad vary from state to state. Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska don't collect state income taxes, so former residents of those states don't have to worry.</p> <p>Make sure to file the applicable tax returns every year. You're lucky that you may be allowed an <a href="http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad---Automatic-2-Month-Extension-of-Time-to-File">automatic two-month extension</a> to file your return and pay any federal income tax that is due. U.S. expats in England, France, and Germany can get help directly at the IRS permanent offices in those countries. All other U.S. expats should review the <a href="http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad">International Taxpayers</a> section of the IRS website.</p> <p><em>Have you ever made any of these &mdash; or any other &mdash; tax filing mistakes?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/8-tax-return-mistakes-even-smart-people-make">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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">Filed an Extension? Here&#039;s What You Need to Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/forgiven-debt-isnt-really-forgiven-at-all">Forgiven Debt Isn&#039;t Really Forgiven At All</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes filing deadline IRS refunds tax mistakes tax returns Tue, 07 Apr 2015 16:54:00 +0000 Damian Davila 1373054 at http://www.wisebread.com 7 Surprising Tax Deductions You Might Miss http://www.wisebread.com/7-surprising-tax-deductions-you-might-miss <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-surprising-tax-deductions-you-might-miss" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_dog_000023943461.jpg" alt="Woman takes surprising tax break for being pet owner" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's getting serious: We're just days away from the tax filing deadline. If you haven't filed your taxes yet, your procrastination may pay off in spades. Here are some surprising deductions that you may be able to take this tax year. (See also: <a href="http://www.wisebread.com/get-a-bigger-refund-with-these-often-overlooked-tax-deductions?ref=seealso">Often Overlooked Tax Deductions</a>)</p> <h2>1. Professional Enhancement</h2> <p>Are any of your expenses related to your work? For example, if you're a music teacher, consider everything you do that enhances the knowledge that you communicate to your students. Do you attend concerts or musicals? Are you taking lessons to brush up your own music skills? These types of costs, while largely recreational and enjoyable, may also be tax deductions if you can show how they translate to your career.</p> <h2>2. Caring for Community Service Animals</h2> <p>While you could set bait and traps to keep pests such as snakes, rats, and other dangerous critters at bay, you could also use more natural methods such as caring for outdoor cats who take care of these pests for you. Believe it or not, the food that you feed these animals is a tax-deductible expense because these animals help make your property (and the community) safer by eliminating harmful pests.</p> <h2>3. Fostering Adoptable Animals</h2> <p>If you're an animal lover who fosters critters prior to adoption, your good deed will be rewarded in more ways than one. Many major animal charities and local shelters have foster programs. With proper documentation from the charity, you may be able to write off all of the expenses incurred when fostering animals, including food and any veterinary bills.</p> <h2>4. Company Giveaways</h2> <p>If you're a business owner, you know that promotional giveaways can often boost sales. The costs of these freebies and promotional items can often be deducted as business expenses because they helped promote, and hopefully grow, your business.</p> <h2>5. Volunteering</h2> <p>It can be tough to carve out the time and budget to volunteer &mdash; for example, if you have kids, you have to arrange for a sitter. The good news is that even though you're paying a sitter (and not making a direct donation to the nonprofit), the cost of the sitter is a tax deduction because it enabled you to volunteer your time and effort to the charity.</p> <h2>6. Volunteer Vacation</h2> <p>Volunteer vacations are a great way to immerse yourself in a culture and have a unique travel experience. Many organizations provide these types of trips. They coordinate housing, in-country cultural activities, and even pay for emergency insurance. Many of the expenses, including the donation you usually make to the nonprofit, can be deducted from your taxes because incurring these expenses enabled you to do the volunteer work.</p> <h2>7. Home Improvements for Medical Reasons</h2> <p>If your doctor advises you to get more exercise or make changes to your home for specific medical reasons, those costs may be tax deductible. That means adding in a gym, fitness equipment, or even a swimming pool if it's used for prescribed medical purposes, may qualify as a tax deduction.</p> <p>As always, please check with your tax preparer to see if you qualify for certain tax deductions. Make sure that you keep precise records of all these expenses and any supporting documentation. Remember, taxes must be filed by April 15th!</p> <p><em>Do any of these deductions apply to your tax situation?</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-surprising-tax-deductions-you-might-miss">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/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/tax-deductions-to-start-thinking-about-now">Tax Deductions to Start Thinking About Now</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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 animals community service deductions expenses home improvements volunteering Mon, 06 Apr 2015 13:00:03 +0000 Christa Avampato 1367916 at http://www.wisebread.com Not So Fast! 5 Things You Must Do After Filing Taxes http://www.wisebread.com/not-so-fast-5-things-you-must-do-after-filing-taxes <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/not-so-fast-5-things-you-must-do-after-filing-taxes" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_phone_000037348706.jpg" alt="Woman on her phone after filing her taxes" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Tax filing can be stressful, fraught with too many numbers and documents &mdash; but when you're finally done, it feels like such a relief. Whether you file online or mail in your return all old school, getting done usually feels like a huge weight off your shoulders.</p> <p>But wait! Before you relax too much, chuck all your papers into the trash, and move on with your life, there are a few things you should keep in mind. Here's what to do <em>after </em>you file your taxes.</p> <h2>1. Keep Your Records</h2> <p>At the very least, keep your records easily accessible and on-hand until you receive your tax refund or until you get notice that your payment has been processed (be sure to verify this with your bank!). That way, you have everything in front of you in case you need to file again (or chase down answers about what happened with your taxes).</p> <p>Otherwise, you should keep copies of your old tax returns indefinitely. It used to be common practice to get rid of these after seven to 10 years. Now that you can store them electronically, though, there's no reason not to keep them longer. Remember that the IRS can audit you for years afterward, so it's important to be prepared.</p> <p>As for other tax-related paperwork, how long you keep your documentation depends on your particular tax situation. Find your particular situation on this <a href="http://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/How-long-should-I-keep-records">tax checklist</a> and store your documents accordingly.</p> <h2>2. Check the Status of Your Filing</h2> <p>If you file electronically, you can check the <a href="http://www.irs.gov/Refunds">status of your taxes</a> as soon as 24 hours after you file (if you mail in your return, it will take up to four weeks for your data to show up in the system). Use the IRS's simple online form, or download their IRS2Go app to check. You'll need your social security number, your filing status, and the exact amount of your refund to login.</p> <p>Checking on your filing won't just aide your peace of mind, but it'll also help you avoid any potential problems before they arise. If your return doesn't show up in the system, for example, you can handle that before your filing is considered late. If you have any doubts, get in touch with your local IRS office.</p> <h2>3. Make Your Payments</h2> <p>If you owe taxes, make sure that you've paid them, and not just filed your return. Most of the time, you can pay when you e-file, or send a check when you mail in your return. If you don't do either of those, though, you can pay through the <a href="http://www.irs.gov/Payments">IRS payments site</a>. Send an electronic check directly from your account, or use a credit or debit card. Pay by <a href="http://www.irs.gov/Individuals/Pay-by-Check-or-Money-Order">check or money order</a> with their instructions.</p> <p>The most important thing is that you pay whatever you owe. It isn't only essential that you file your return, but that the government gets any money that is theirs by the April 15 deadline.</p> <h2>4. ...Or File for a Payment Plan</h2> <p>If you discover that you owe more money than you expected, or if you just don't have the cash on hand, you can request a payment plan. There's an online <a href="http://www.irs.gov/Individuals/Online-Payment-Agreement-Application">payment agreement application</a>, and as long as you meet their requirements, they're fairly easy to get.</p> <p>It goes without saying that if you have a payment plan, you need to stick to it. Failing to pay owed money to the IRS comes with consequences.</p> <h2>5. If You're Struggling, File an Extension</h2> <p>Technically, this isn't something you do after you file your taxes. But if you're really having difficulty finishing your taxes in a timely fashion, file an extension. These are granted automatically, as long as you fill out your paperwork properly.</p> <p>A tax extension will give you an extra six months to file your taxes, so your return will be due October 15 instead of April 15. Make sure you file it before the original due date and that you figure out whatever you need before your final deadline.</p> <p>If you've got all these ducks in a row, take a break. Relax. Breathe. Do something fun. You definitely deserve it.</p> <p><em>What do you do after you file your taxes? And how will you celebrate being done with them?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/not-so-fast-5-things-you-must-do-after-filing-taxes">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/charitable-giving-get-a-receipt">Charitable giving - get a receipt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">Filed an Extension? Here&#039;s What You Need to Know</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/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-5 views-row-odd views-row-last"> <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> </ul> </div> </div> </div> </div><br/></br> Taxes filing IRS payment plans records tax extensions Thu, 02 Apr 2015 09:00:10 +0000 Sarah Winfrey 1360955 at http://www.wisebread.com Bigger Paycheck or Bigger Tax Refund — Which Should You Pick? http://www.wisebread.com/bigger-paycheck-or-bigger-tax-refund-which-should-you-pick <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/bigger-paycheck-or-bigger-tax-refund-which-should-you-pick" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_money_000044737724_0.jpg" alt="Woman shopping with money from big tax refund" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the earliest money lessons that I remember learning from my financial planner father was the correct protocol for tax refunds: The ideal situation is to receive a modest refund of $500 or less. (See also: <a href="http://www.wisebread.com/12-smart-ways-to-turn-500-into-a-better-future?ref=seealso">12 Smart Ways to Spend $500</a>)</p> <p>This advice struck a chord because it made perfect sense. Why give Uncle Sam an interest-free loan every year just to feel the excitement of getting <em>your own money</em> back each spring? I agreed with my father that it's a far better idea to keep the money in your paycheck, invest it throughout the year, and let it work for you.</p> <p>Which prompts the question &mdash; why do nearly <a href="http://money.cnn.com/2015/01/13/pf/taxes/taxpayer-refunds/">80% of taxpayers</a> get a refund each year, at an average size of $2,800?</p> <p>What financial planning advice often overlooks is the importance of psychology in money matters. For individuals like me, who can think of nothing more fun to do on a Saturday night than balance my checkbook, getting a modest refund really is the ideal situation for managing money. But for many taxpayers, getting a big refund can be the best path to good financial decisions.</p> <p>How do you know if you would be better off with a big refund or a modest one? Learn more about the psychological quirks could influence your refund decisions.</p> <h2>The Denomination Effect</h2> <p>The denomination effect is a phenomenon wherein people are less likely to spend big bills compared to small ones. If you have ever held onto a $50 or a $100 bill for several weeks, but don't blink an eye at spending the same amount in tens, fives, and singles, then you have experienced this effect.</p> <p>When it comes to taxes, the denomination effect is why you might not even notice an extra sixty bucks in your weekly paycheck &mdash; but turn that into a $3000 refund check at the end of the year, and suddenly it's a large enough amount of money that you feel the need to do something intelligent with it.</p> <p>If you struggle with keeping track of smaller amounts of money, but feel perfectly comfortable making good decisions with a large check, then it might make sense for you aim for a large refund that you invest. It will be a better use of that three grand than frittering away your extra $60 a week. (See also: <a href="http://www.wisebread.com/50-smart-things-to-do-with-your-tax-refund?ref=seealso">50 Smart Things to Do With Your Tax Refund</a>)</p> <h2>Loss Aversion</h2> <p>This cognitive bias describes people's tendency to strongly prefer avoiding losses over acquiring gains. Loss aversion is a nearly universal behavioral quirk that explains why so many investors hold onto tanking stocks, why would-be exercisers continue sending money each month to a gym they never visit, and why you probably still have a bread machine <a href="http://www.wisebread.com/10-things-in-your-basement-you-should-throw-out-today">collecting dust in your basement</a>. We all hate to feel as though we are losing money on something that we have already paid for.</p> <p>In terms of taxes, the idea of potentially owing the IRS more money come April 15 is off-putting enough to keep many taxpayers from reducing their refunds. Losing money each paycheck to taxes is a given, but the idea of having to write a check to the IRS triggers loss aversion in many taxpayers. They would rather give up the money temporarily throughout the year and overpay Uncle Sam than face the prospect of having to give up &quot;real&quot; money if they get their accounting wrong.</p> <p>If the thought of having to pay more in taxes than you had withheld from your paychecks puts you in a cold sweat, then aiming for a large refund might be the best option for you. Yes, your money could potentially be doing more for you in your pocket, but what good is maximizing your finances if you sweat bullets thinking about tax time?</p> <h2>The Money Illusion</h2> <p>This term was popularized by the famous economist John Maynard Keynes, and it describes our inability to recognize that a dollar amount is only as good as its purchasing power. Keynes used the term to describe the phenomenon of feeling richer when you receive a raise, even though costs have also risen; meaning you are earning the exact same purchasing power you did before the raise.</p> <p>When it comes to taxes, the money illusion means that for some people, having a $3,000 refund check burning a hole in their pocket could lead them to make poor financial choices because of the sheer size of the refund.</p> <p>For instance, if you are feeling flush, you may find yourself spending with impunity in every area of your life, from the expensive chocolate you rarely indulge in, to new shoes that you don't really need. But unless you are keeping careful track of each expenditure (which is the opposite of &quot;spending with impunity&quot;), you will likely reach the end of your big refund amount and keep on spending because you are focused on the dollar amount rather than what it buys. Your <a href="http://www.wisebread.com/mental-accounting-why-you-blow-your-tax-refund-but-not-your-raise">mental accounting</a> of your refund money has trouble keeping up with your actual spending.</p> <p>If you have a tendency to burn through money quickly when you have a big windfall, then it's probably a good idea to aim for a modest tax return &mdash; and set up a direct deposit of the saved money into an investment, retirement, or savings account. That way, you can make the intelligent decisions about your money before you are faced with an amount that will trigger the money illusion.</p> <h2>Don't Discount Your Money Psychology</h2> <p>We tend to think of money as a purely rational issue, but it's foolish to ignore the fact that how you feel about money will influence your financial decisions, for better or worse. In a purely rational world, receiving a large refund check every April does not make any sense. But depending on your personal money makeup, you might find that a large refund is your ideal, or you might find that keeping more of your cash in each paycheck works best for you.</p> <p>The important thing is to be mindful when you make decisions about money, and to take your psychology and your strengths and weaknesses into account. Know yourself, and your finances will thank you.</p> <p><em>Are you getting a big refund? 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/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/bigger-paycheck-or-bigger-tax-refund-which-should-you-pick">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/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/simple-tax-strategies-to-maximize-your-tax-refund">Simple Tax Strategies to Maximize Your Tax Refund</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/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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-green-home-rebates-that-save-you-big-in-2015">4 Green Home Rebates That Save You Big 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/101-tax-deductions-for-bloggers-and-freelancers">101 Tax deductions for bloggers and freelancers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes denomination effect loss aversion money psychology spending habits tax refund Tue, 31 Mar 2015 11:00:08 +0000 Emily Guy Birken 1360774 at http://www.wisebread.com 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-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/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/7-surprising-tax-deductions-you-might-miss">7 Surprising Tax Deductions You Might Miss</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/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-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">Filed an Extension? Here&#039;s What You Need to Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/forgiven-debt-isnt-really-forgiven-at-all">Forgiven Debt Isn&#039;t Really Forgiven At All</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-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/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/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/4-things-millennials-should-do-today-to-prepare-for-retirement">4 Things Millennials Should Do Today to Prepare for Retirement</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/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird 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-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/not-so-fast-5-things-you-must-do-after-filing-taxes">Not So Fast! 5 Things You Must Do After Filing Taxes</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <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-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">Filed an Extension? Here&#039;s What You Need to Know</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/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-5 views-row-odd views-row-last"> <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> </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-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/should-you-choose-a-roth-401k-or-a-regular-401k">Should You Choose a Roth 401k or a Regular 401k?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/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-3 views-row-odd"> <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-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-set-up-an-ira-to-build-wealth">How to Set Up an IRA to Build Wealth</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/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> </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-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/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-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/filed-an-extension-heres-what-you-need-to-know">Filed an Extension? Here&#039;s What You Need to Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-great-places-to-get-free-tax-advice">6 Great Places to Get Free Tax Advice</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-amazing-outrageous-and-just-plain-weird-tax-deductions">20 amazing, outrageous and just plain weird tax deductions</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-file-your-taxes-for-free-in-2015">8 Ways to File Your Taxes for Free in 2015</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-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/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/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-3 views-row-odd"> <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-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/tax-penalties-for-early-retirement-withdrawals">Tax Penalties for Early Retirement Withdrawals</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-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/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/10-local-charities-that-could-use-your-stuff">10 Local Charities That Could Use Your Stuff</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