tax breaks http://www.wisebread.com/taxonomy/term/8242/all en-US 8 Tax Tricks to Try if You're Stuck With Student Loans http://www.wisebread.com/8-tax-tricks-to-try-if-youre-stuck-with-student-loans <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-tax-tricks-to-try-if-youre-stuck-with-student-loans" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/college_grad_cash_000049202136.jpg" alt="New grad stuck with student loans trying tax tricks " title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you're buried in student loan debt, it doesn't seem fair to be paying taxes. That's why it's important to get as much as you can back with your tax returns. Take advantage of deductions and credits, and if you're fortunate enough to be able to do so, use your returns to pay down a big chunk of your debt. Here's what you should be looking for while filling out your return.</p> <h2>1. Deduct Interest Paid</h2> <p>You can deduct the interest you pay on your debt. At least this way you recoup some of what you spent.</p> <p>You'll file the deduction as an adjustment to income. The maximum amount you can deduct is $2,500. If you've paid more than $600 in interest in the past year, you should receive form 1098-E from your lender. Box #1 will tell you how much interest you paid.</p> <p>If you paid less than $600, you'll have to check records to see how much to deduct. There's an income ceiling &mdash; after you make $80,000 a year, you're exempt. See the <a href="https://www.irs.gov/taxtopics/tc456.html">IRS page</a> on this topic.</p> <p>Are you still in school? I recommend not deferring your interest payment. If you do defer, your lender simply tacks that interest onto the principal of your loan. Then, you end up paying interest on the interest.</p> <h2>2. Deduct Tuition and Fees</h2> <p>This deduction adjusts the amount of income on which you're taxed. It's good for up to $4,000 per year. If you're a dependent on someone else's tax return or you are married and filing separately, you don't qualify. Like the interest deduction, if you earn a certain amount, you're exempt. Also, if you want to claim either of the education tax credits (see &quot;Stay in School&quot; below), you can't claim the <a href="https://www.taxslayer.com/support/knowledgebasearticle187.aspx">Tuition and Fees Deduction</a>.</p> <h2>3. Get the Earned Income Tax Credit</h2> <p>If you qualify for it, get it. The EITC, or EIC, is for those of us with low income. Surprisingly, only about 80% of workers who qualify for the credit claim it. If you're married, don't file separately &mdash; this will disqualify you. If you're single, to get this credit you have to make less than $14,820 in a year. If you're married and/or have kids the <a href="http://www.efile.com/what-is-the-earned-income-tax-credit-eitc-eic-eligibility-schedule-calculator/">qualification ceiling goes up</a>.</p> <h2>4. Take on Freelance Work</h2> <p>Not only will freelancing earn you more money towards paying off your debt, you'll also be able to write off a number of expenses. These deductions include work materials, such as a laptop or tablet you use exclusively for freelance writing. You can write off meals and snacks you eat in the course of your workday. You can also write off expenses related directly and indirectly to the space you use for work. Yes it's a hassle, but make sure to document your expenses if you want to qualify for deductions.</p> <h2>5. Stay in School</h2> <p>Is graduation in sight but you're nervous about your post-graduate plans? You may want to stay in school. Here's the logic behind this: College students can be eligible for some great <a href="http://www.businessinsider.com/four-major-student-tax-breaks-2013-1">tax breaks</a>:</p> <ul> <li><em>American Opportunity Credit</em> &mdash; Up to $2,500 for tuition, fees, books, and other equipment<br /> &nbsp;</li> <li><em>Lifetime Learning Credit</em> &mdash; Up to $2,000 for education-related expenses</li> </ul> <p>You can only claim one of these credits. To get the American Opportunity Credit, you have to be at least a part-time student, and you can only claim it for the first four years of college. It's refundable by up to $1,000, meaning you could see that money go right back into your pocket.</p> <p>The Lifetime Learning Credit applies to the student who wants to continue for more than four years, or go to graduate school.</p> <p>Combined with the <a href="http://www.wisebread.com/dont-skip-these-8-tax-breaks-for-students" target="_blank">student loan interest deduction</a>, tax credits can save you a nice chunk of change to apply towards paying off your loans. Work a freelance job at the same time, get the freelancer deductions, and now you're talking tax strategy. But know you can't make more than $80,000 a year to get the American Opportunity Credit, and no more than $60,000 to get the Lifetime Learning Credit.</p> <h2>6. Look Into the Business Deduction for Work-Related Education</h2> <p>Here's a scenario. You're a writer and you're going to school to get a degree in English with some sort of writing emphasis. On the side, you do freelance writing to make a little extra cash. You can deduct your education expenses.</p> <p>Or, your employer can pay for your education and write it off on their taxes. Your degree has to go toward continuing in your employment field, and it can't be a degree toward meeting your employer's minimum educational requirements.</p> <p>Even if you're on a leave of absence from work, you can <a href="https://www.irs.gov/taxtopics/tc513.html">still deduct educational expenses</a>.</p> <h2>7. Paying for Child Care? The Child and Dependent Care Credit</h2> <p>You can get a credit of up to $3,000 for one child/dependent, or $6,000 for two children/dependents, per year. You have to be employed or seeking employment. If you're a full-time student, you qualify as being employed. Your income will determine your credit amount, but the nice thing is there is no income ceiling. You must provide your child care provider's information, as they must be a qualifying provider (not your spouse or one of your older kids). The <a href="http://www.taxcreditsforworkingfamilies.org/child-and-dependent-care-tax-credit/">Child and Dependent Care Tax Credit</a> is a nice boost, and combined with the other credits listed here, will definitely help you out come tax time.</p> <h2>8. Get Free Tax Prep</h2> <p>All of this is a lot to take in, and doing your own taxes can be frustrating, especially if you're pressed for resources. Is there a community college in your area? Under the IRS VITA program, low to moderate-income Americans can get tax help from volunteers at community colleges and other locations. Of course there are qualifications you have to meet, and materials you have to bring. You qualify if:</p> <ul> <li>You make $54,000 a year or less<br /> &nbsp;</li> <li>You're elderly or incapable of preparing on your own taxes due to disability<br /> &nbsp;</li> <li>You speak limited English</li> </ul> <p>The IRS page on this topic will provide you with a tool for finding the <a href="https://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers">closest VITA tax-preparer</a>, and info on <a href="https://www.irs.gov/Individuals/Checklist-for-Free-Tax-Return-Preparation">what to bring</a>.</p> <p>Happy tax prep!</p> <p><em>Have you taken advantage of these tax breaks for students?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/daniel-matthews">Daniel Matthews</a> of <a href="http://www.wisebread.com/8-tax-tricks-to-try-if-youre-stuck-with-student-loans">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/a-better-way-to-rank-americas-colleges">A Better Way to Rank America&#039;s Colleges</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/12-easy-ways-to-avoid-student-loan-debt">12 Easy Ways to Avoid Student Loan Debt</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/when-should-you-start-saving-for-your-child-s-education">When Should You Start Saving for Your Child’s Education?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-most-common-tax-mistakes-made-by-college-grads">5 Most Common Tax Mistakes Made by College Grads</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-get-student-loan-debt-forgiveness">8 Ways to Get Student Loan Debt Forgiveness</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Taxes college dependents interest student loans tax breaks tax deductions tuition Mon, 04 Apr 2016 09:30:34 +0000 Daniel Matthews 1683568 at http://www.wisebread.com 4 Tax Deductions New Homeowners Shouldn't Skip http://www.wisebread.com/4-tax-deductions-new-homeowners-shouldnt-skip <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-tax-deductions-new-homeowners-shouldnt-skip" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_moving_boxes_000029693370.jpg" alt="Couple taking tax deductions they shouldn&#039;t skip" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You bought your first home this year. Even better, come tax day, <a href="http://www.wisebread.com/9-costly-things-new-homeowners-dont-prepare-for">owning a home</a> can provide you with big financial rewards. That's because homeowners can claim several tax breaks that can shave thousands off your tax bill.</p> <p>But they won't help you if you don't claim them. Here is a list of the most important tax breaks for homeowners. To claim these, you'll have to itemize your taxes using IRS Form 1014 and Schedule A. This means that you'll no longer be able to quickly fill out your income taxes with the 1040EZ form.</p> <p>You'll find, though, that the extra work usually pays off with solid savings.</p> <h2>1. Mortgage Interest Deduction</h2> <p>When you first begin paying your mortgage, the bulk of your payments go toward interest, not the principal balance on your loan. The good news at tax time is that you can deduct the interest that you pay on your mortgage. These deductions can be sizable during your first years of owning a home.</p> <p>There is a limit, though, on interest deductions. You can't claim mortgage interest payments if your home loan is more than $1 million, but fortunately, that's not something that most new owners will have to worry about.</p> <p>Your lender will send you a Form 1098 each January. This form will list how much you paid in mortgage interest throughout the year. You then simply enter that number when filing your taxes.</p> <h2>2. Property Taxes</h2> <p>Depending on where you live, you might pay plenty in property taxes each year. Usually, you'll pay a portion of your yearly property taxes with each mortgage payment you make. You'll include extra dollars with your mortgage payment &mdash; in an amount determined by your lender &mdash; that your mortgage provider will then deposit in an escrow account. When your property taxes are due, your lender will pay them on your behalf from this account.</p> <p>Fortunately, you can deduct your property taxes each year, too. If you have an escrow arrangement with your mortgage lender, the amount you pay in property taxes will also be listed in the Form 1098 that they will send you in January.</p> <h2>3. Points</h2> <p>Did you pay your lender points to reduce your interest rate? If so, you might be able to deduct their cost, too.</p> <p>Buyers spend 1% of their home loan to buy a single point. Lenders allow buyers to purchase points as a way to lower their interest rate. The goal for buyers is to spend a bit upfront for a lower interest rate that guarantees them lower monthly payments for the life of their loan.</p> <p>If you did pay points, the amount you paid will again be listed in the Form 1098 that your lender sends to you.</p> <h2>4. Private Mortgage Insurance</h2> <p>Homeowners don't like paying for private mortgage insurance. This is no surprise. This insurance doesn't protect homeowners at all. Instead, it protects your mortgage lender in case you stop making your monthly payments.</p> <p>But you can deduct your private mortgage insurance premiums on your taxes, thanks to the new Protecting Americans From Tax Hikes Act of 2015. This recent piece of legislation preserves the deduction for private mortgage insurance for the 2015 and 2016 tax years.</p> <p>You'll have to pay for private mortgage insurance if the down payment you provided was less than 20% of your new home's purchase price. You can drop private mortgage insurance on conventional loans not insured by the federal government once your loan-to-value ratio hits 80%.</p> <p><em>Are you claiming all your real estate tax deductions?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/4-tax-deductions-new-homeowners-shouldnt-skip">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/8-tax-tricks-to-try-if-youre-stuck-with-student-loans">8 Tax Tricks to Try if You&#039;re Stuck With Student Loans</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-a-30-year-mortgage-is-a-smart-financial-choice">Here&#039;s Why a 30-Year Mortgage Is a Smart Financial Choice</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/3-unbelievable-real-estate-tax-shelters-of-the-rich">3 Unbelievable Real Estate Tax Shelters of the Rich</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everything-a-first-time-home-buyer-needs-to-buy-a-house">Everything a First-Time Home Buyer Needs to Buy a House</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Taxes deductions interest new homeowners pmi points tax breaks Fri, 04 Mar 2016 10:30:43 +0000 Dan Rafter 1666375 at http://www.wisebread.com 5 Important Tax Changes for 2016 http://www.wisebread.com/5-important-tax-changes-for-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-important-tax-changes-for-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000054433640.jpg" alt="Child learning important tax changes for 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>What comes with a new year? Changes to the federal tax code, of course. And 2016 is no exception.</p> <p>These changes could mean big financial penalties if you don't have health insurance. Or they could bring you big savings if you happen to own a small business. Overall, the changes to the tax code that Congress enacted last year are beneficial to consumers, according to Dave Du, vice president of consumer advocacy at TaxAudit.com.</p> <p>&quot;With just days to go before the end of the year, Congress finally extended most of the tax breaks which were set to expire,&quot; Du said. &quot;Some of these provisions &mdash; like the definition of racehorse as property &mdash; won't impact too many of us, but there's much good news for taxpayers this year.&quot;</p> <p>One example? You can file later this year. The deadline for filing your income taxes this year is April 18 instead of April 15, thanks to something called Emancipation Day in Washington, D.C.</p> <p>Here are five other big tax changes you should be prepared for this year.</p> <h2>1. A Climbing Health Insurance Penalty</h2> <p>One of the bigger changes to the tax code this year is actually a punitive one: An increase in the penalty for not having health insurance that meets the requirements of the Affordable Care Act.</p> <p>Micah Fraim, a Roanoke, Virginia-based Certified Public Accountant, said that for the 2015 tax year &mdash; those are the taxes you'll be filing by April 18 &mdash; filers will have to pay a penalty of $325 for every uninsured adult and $162.50 for every uninsured dependent child, or 2% of your taxable income &mdash; whichever number is greater.</p> <p>That's a significant increase. For the 2014 tax year, those numbers stood at $95 and $47.50, or 1% of your taxable income. &quot;And in 2016, it gets even worse,&quot; Friedman said.</p> <p>For the 2016 tax year &mdash; the taxes you will file by April of 2017 &mdash; the penalty for not having insurance rises to $695 per adult and $347.50 per child, or 2.5% of your income. The message is clear: If you don't have acceptable health insurance, it's time to get it. (See also:&nbsp;<a href="http://www.wisebread.com/avoid-these-5-costly-health-insurance-mistakes">Avoid These 5 Costly Health Insurance Mistakes</a>)</p> <h2>2. New Health Insurance Forms</h2> <p>You can also expect to receive a new form or two in the mail relating to health insurance. If you've purchased health insurance through the federal government's Health Insurance Marketplace, you'll receive Form 1095-A. This isn't a change &mdash; the government began mailing this form out for the 2014 tax year.</p> <p>But there are two new health insurance forms for the 2015 tax year. Form 1095-B is a statement from your health insurance company verifying that you and other members of your household have insurance coverage that meets the requirements of the Affordable Care Act. This form is only sent to taxpayers who get their insurance from somewhere other than the Health Insurance Marketplace, such as from their employer. Form 1095-C is a statement from your employer that provides details about your employer-sponsored health benefits.</p> <p>Many taxpayers will receive both 1095-B and 1095-C, of course. The key fact to realize? You probably won't have to do anything with these forms, said Andrew Oswalt, Certified Public Account for Cedar Rapids, Iowa-based TaxACT.</p> <p>&quot;The new forms could be confusing because most people will think they have to do something with them,&quot; Oswalt said. &quot;The reality is, they'll simply need to mark a checkbox on their Form 1040 when filing and keep the forms 1095-B and 1095-C for their records.&quot;</p> <h2>3. A Tax Break for Small Business Owners</h2> <p>Priyanka Prakash, finance specialist at loan-search service FitBiz Loans, said that small business owners need to be aware of Section 179 of the tax code &mdash; a new tax law that lets them deduct up to $500,000 of qualifying equipment on their tax returns.</p> <p>To qualify for this deduction, the equipment must be used primarily for business purposes, Prakash said. The equipment must also have been put into use during the 2015 calendar year.</p> <p>&quot;This covers a wide range of equipment, from computers to furniture to business vehicles,&quot; Prakash said.</p> <p>Prakash gives this example: If a business purchases office equipment worth $100,000, it can then deduct that entire purchase amount on its taxes. If the business has a tax rate of 30%, Section 179 will save it $30,000 in taxes. Previously, business owners could only deduct a small amount every year based on the life of the equipment.</p> <p>&quot;Section 179 saves small businesses a lot of money,&quot; Prakash said.</p> <h2>4. A Break for College Students</h2> <p>Tom Wheelwright, a Certified Public Account and author of <a href="http://www.amazon.com/gp/product/1937832058/ref=as_li_tl?ie=UTF8&amp;camp=1789&amp;creative=9325&amp;creativeASIN=1937832058&amp;linkCode=as2&amp;tag=wisbre03-20&amp;linkId=TFRKWZZ4OXTQ44N2" target="_blank">Tax-Free Wealth</a>, said that the 2015 tax year brought an important break for college students who are filing their own taxes or parents who claim these students as dependents.</p> <p>Congress made permanent the American Opportunity Tax Credit, which gives college students a credit of $2,500 per year for college tuition, fees, and course materials. Parents can claim the exemption for their college-age students as long as they claim these students as dependents on their income taxes.</p> <h2>5. A Boon for Heads of Household</h2> <p>The standard deduction is set to rise &mdash; a bit &mdash; for heads of households. The standard deductions that most taxpayers can claim in 2016 haven't risen for single taxpayers or married couples filing jointly or separately. Blame that on low inflation.</p> <p>But the standard deduction for taxpayers filing as the head of their households is going up a bit, rising $50 for 2016. That brings that standard deduction up to $9,300 in 2016.</p> <p><em>Are you ready for tax time this year?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-important-tax-changes-for-2016">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-most-common-tax-mistakes-made-by-college-grads">5 Most Common Tax Mistakes Made by College Grads</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-to-choose-the-best-tax-preparer">How to Choose the Best Tax Preparer</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/the-easiest-way-to-avoid-a-tax-audit">The Easiest Way to Avoid a Tax Audit</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/top-three-tax-facts-to-know-for-2016">Top Three Tax Facts to Know for 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Taxes deductions filing health insurance IRS penalties tax breaks Tue, 19 Jan 2016 12:00:03 +0000 Dan Rafter 1639404 at http://www.wisebread.com 6 Ways to Put Your 2011 Payroll Tax Break to Work http://www.wisebread.com/6-ways-to-put-your-2011-payroll-tax-break-to-work <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-to-put-your-2011-payroll-tax-break-to-work" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000014181412XSmall.jpg" alt="Extra money falling from above" title="Extra money falling from above" class="imagecache imagecache-250w" width="250" height="165" /></a> </div> </div> </div> <p>With Congress and President Obama having put their stamp of approval on the 2011 tax deal, a major component of the legislation affecting virtually all working Americans is a change to the payroll tax. Historically, employees were subject to a tax of 6.2% of earnings up to a cap, which is $106,800 for 2011. In order to help stimulate the economy and achieve a compromise on tax breaks, this payroll tax has been reduced to 4.2% for 2011, effectively giving everyone a 2% raise on their first $106,800 earned (so a full 2% raise for most of us!). With this new-found bonus for 2011, are you going to just let it melt into your budget and spend it blindly (which is what the government intended) or strategically allocate this money to a specific objective or cause?</p> <h3>Increase Your 401(k) Contribution</h3> <p>This is what I'm doing. I went into my 401(k) account first thing and immediately increased my contribution by 2%. Since we were making do with my take-home pay last year, I figured by automatically directing the extra 2% right to my retirement account, we wouldn't even notice the difference. Who knows, if I get a decent raise this year, maybe I won't even have to back it down again in 2012 when the 2% break expires.</p> <h3>Build Your Emergency Fund</h3> <p>With so few people having a sizable emergency fund for layoffs or life events, it's worth considering shifting some extra funds into a dedicated emergency fund account (for more, see &quot;<a href="http://www.wisebread.com/figuring-the-size-of-your-emergency-fund">Figuring the Size of your Emergency Fund</a>&quot;).</p> <h3><strong> </strong>Pay Down Debt</h3> <p>Allocating an additional 2% monthly to existing high-interest debt may be a better use of your funds than any other options presented, especially if you're talking about credit card debt with an interest rate over 20%.</p> <h3>Give It Back</h3> <p>Many people are frustrated with the constant government giveaways and don't feel they actually deserve or need this tax break. As a result, they're giving the money away. For instance, some professors started a website that allows &quot;the rich&quot; to give back tax deductions in the name of job creation at <a href="http://giveitbackforjobs.org/">Give It Back for Jobs</a>. If that's not your fancy, surely there's a local cause or favorite charity where you could direct an equivalent amount from your payroll tax break.</p> <h3>College Savings</h3> <p>With young children, setting aside just a few thousand dollars a year goes a long way in helping to offset the costs of college. Presently, the most popular option is the 529 plan (see this <a href="http://www.wisebread.com/rethinking-the-529-college-savings-plan-strategy">529 plan article</a> on the benefits of the pre-paid tuition vs. self-directed investment options).</p> <h3>Invest in Your Home with Green Upgrades</h3> <p>Perhaps you've been putting off that new energy-efficient front door or replacing a few windows. Well, part of the 2011 tax deal is also an extension of some portions of the <a href="http://www.darwinsmoney.com/energy-tax-credit-2011/">energy tax credit</a>. While the credits aren't as attractive as they were in 2009 and 2010, you can still save a few hundred dollars on an energy upgrade for your home and realize the longer-term benefits of lower costs moving forward.</p> <p><em>What are you going to do with your 2% raise?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/darwins-money">Darwins Money</a> of <a href="http://www.wisebread.com/6-ways-to-put-your-2011-payroll-tax-break-to-work">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/how-will-the-obama-tax-cut-deal-affect-you">How Will the Obama Tax-Cut Deal Affect You?</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-indirect-ways-taxes-to-the-rich-may-hurt-you">6 Indirect Ways Taxes to the Rich May Hurt You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-tax-tricks-to-try-if-youre-stuck-with-student-loans">8 Tax Tricks to Try if You&#039;re Stuck With Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-tax-deductions-new-homeowners-shouldnt-skip">4 Tax Deductions New Homeowners Shouldn&#039;t Skip</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Financial News Taxes Payroll Tax tax breaks tax credit tax cuts Thu, 06 Jan 2011 13:00:10 +0000 Darwins Money 437688 at http://www.wisebread.com Last-Minute Business Tax Deductions for 2010 http://www.wisebread.com/small-business/last-minute-business-tax-deductions-for-2010 <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/idea-hub/topics/money/article/last-minute-business-tax-deductions-for-2010-scott-allen-1" target="_blank">http://www.openforum.com/idea-hub/topics/money/article/last-minute-business-tax-...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/last-minute-business-tax-deductions-for-2010" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000002491104XSmall.jpg" alt="People looking at documents" title="People looking at documents" class="imagecache imagecache-250w" width="250" height="166" /></a> </div> </div> </div> <p>It&rsquo;s the end of the year, and you&rsquo;re already thinking about 2011. If you&rsquo;re looking at your first-quarter cash flow, one thing you can do to improve it is to minimize your 2010 tax bill (or maximize your refund). There are still several things you can do before the end of the year to claim deductions or take advantage of tax rules that are ending this year. Some may require spending a little money, while others are more a matter of timing.</p> <p><strong>Buy now, deduct now, and pay later.</strong></p> <p>&ldquo;Deduct charged expenses. Both cash and accrual basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when paid.&rdquo;</p> <p>Macy Story<br /> Tax Manager, <a href="http://bkhmcpa.com/">BKHM CPA</a></p> <p><strong>If you&rsquo;re planning any big-ticket purchases&hellip;</strong></p> <p>&ldquo;It would be advantageous from a tax standpoint to buy any large fixed asset purchases by December 31, 2010 as opposed to January 1, 2011 because there are currently special bonus depreciation rules enacted for 2010 that allow an expense for 50% of the purchase.&rdquo;</p> <p>Brian Schlang, CPA<br /> <a href="http://www.mbafcpa.com/">Morrison, Brown, Argiz &amp; Farra, LLP</a></p> <p><strong>And if one of them is a car...</strong></p> <p>&ldquo;Maximize auto depreciation for 2010 purchases. If you buy a new car and place it in service before the end of 2010, your first year depreciation deduction will be $11,060. If you wait until 2011 (assuming Congress doesn't extend the bonus depreciation deduction and the 2011 first year depreciation cap is the same as for 2010), your first year depreciation deduction would be only $3,060.&rdquo;</p> <p>David Kostmayer, CPA<br /> <a href="http://www.kostmayerpllc.com/">Barrett &amp; Kostmayer, PLLC</a></p> <p><strong>Do you have business property that you&rsquo;ve held for more than a year and are considering liquidating?</strong></p> <p>&ldquo;Due to the presumed expiration of the Bush Tax Cuts, you should review your investments and clean house as the Capital Gains rate increases to 25% from 15% as of January 1, 2011. Along with this change, the reduced tax rate treatment for some dividends also increases in a like manner. So, if you have investments that you are looking at changing up, do it before the end of the year to save some on the tax front.&rdquo;</p> <p>Eric M. Anderson, CPA<br /> <a href="http://www.ema-cpa.com">www.ema-cpa.com</a></p> <p><strong>Do you develop software? You&lsquo;re entitled to a little extra credit.</strong></p> <p>&ldquo;Assuming Congress extends the R&amp;D Tax Credit, 2010 is not limited by AMT (Alternative Minimum Tax). In your industry, identify what you've spent on any software development projects, whether for in-house use, or for providing value-add to your client base. These costs could include the salaries for your in-house coders, or the invoice dollars spent on outside developers. The R&amp;D Credit reduces your tax liability approximately 7 cents for every dollar spent on these innovative efforts.&rdquo;</p> <p>Brian Lefever<br /> VP of Operations, <a href="http://www.titanarmor.com/">Titan Armor</a></p> <p><strong>Was this your first year in business, or are you considering starting a new venture soon?</strong></p> <p>&ldquo;The Small Business Jobs Act of 2010 temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today. &rdquo;</p> <p>Michael Kaplanidis, CPA<br /> Managing Director and Founder, <a href="http://www.taxesatwork.com">Water Street Associates</a></p> <p><strong>And finally some food for thought, especially if you&rsquo;re expecting 2011 to be significantly better than 2010...</strong></p> <p>&ldquo;Normally tax professionals recommend that, to defer paying taxes, you claim whatever business deductions you can before the end of the current year and defer whatever income you can to the following year. However, 2011 is likely to see a tax increase, particularly for high-income taxpayers. Therefore, it's possible that a deduction claimed in 2011 will be more beneficial (save more tax) than the same deduction claimed in 2010.&rdquo;</p> <p>Jan Zobel EA<br /> <a href="http://www.JanZtax.com">www.JanZtax.com</a></p> <p>As you can see, some of these options could potentially save you thousands of dollars by acting before the end of the year &mdash; not just accelerating a year of cash flow, but in actual savings. These are provided here for educational purposes &mdash; a starting point for a conversation with your CFO, CPA, and tax attorney. Keep in mind that tax planning and tax preparation are two different things. If you&rsquo;ve only hired your CPA to do your tax preparation, don&rsquo;t expect them to get overly creative. Have a separate conversation with them about some of these options you may want to explore &mdash; the sooner, the better.</p> <p><em>For more tax-break information, check out our articles on </em><em><a href="http://www.openforum.com/idea-hub/topics/money/article/new-tax-breaks-for-the-swift-barbara-weltman">New Tax Breaks for the Swift</a></em><em> and </em><a href="http://www.openforum.com/idea-hub/topics/money/article/31-small-business-tax-deductions-gregory-go"><em>31 Small Business Tax Deductions</em></a>.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/scott-allen">Scott Allen</a> of <a href="http://www.wisebread.com/small-business/last-minute-business-tax-deductions-for-2010">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/8-tax-tricks-to-try-if-youre-stuck-with-student-loans">8 Tax Tricks to Try if You&#039;re Stuck With Student Loans</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/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses">The 5 Best Credit Cards for Small Businesses</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-smart-ways-to-get-a-small-business-loan">10+ Smart Ways to Get a Small Business Loan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-important-tax-changes-for-2016">5 Important Tax Changes for 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship Small Business Resource Center Taxes small business small business taxes tax breaks tax deductions Sun, 05 Dec 2010 17:19:23 +0000 Scott Allen 339411 at http://www.wisebread.com The Economic Stimulus Bill: Will The Heavy Debt Be Worth It? http://www.wisebread.com/the-economic-stimulus-bill-will-the-heavy-debt-be-worth-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-economic-stimulus-bill-will-the-heavy-debt-be-worth-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stimulus-bill-2.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="250" /></a> </div> </div> </div> <p>In recent weeks, I've gotten into some great discussions with people about the <a href="http://www.wisebread.com/will-the-buy-american-clause-in-the-stimulus-bill-create-or-destroy-jobs">stimulus bill</a> that was cobbled together by Congress last week.&nbsp;&nbsp; At one point, one of the proposed versions of the package grew to a staggering $900 billion until it was wrestled back to a relatively trimmer $800 billion.&nbsp; I suppose we should thank our wonderful leaders that they were somehow able to spare us the additional debt.</p> <p>A lot of people are still preoccupied about where their stimulus check is, but let's look at the big picture for the moment.&nbsp; Now that the stimulus package details have been released, I've found many people weighing in on both sides of the debate: is the plan justified?&nbsp;</p> <h3>The Hotly Debated Economic Stimulus Bill</h3> <p>Some of the arguments and concerns I've read have been swirling around these points:</p> <ol> <li><strong>We need to spend for the short term.</strong> Spending is expected to take us out of the hole we're in. Many students of Keynesian economics and past history will vouch for the effectivity of this approach.<br /> &nbsp;</li> <li><strong>We'll be in deep debt as a nation for many generations.</strong> We are sacrificing our future and our children's future to speed up the economy's recovery.&nbsp; Many personal finance enthusiasts maintain this concern, as many of us are debt averse.<br /> &nbsp;</li> <li><strong>We need to define &quot;stimulus&quot;.</strong> What kind of spending should this bill contain?&nbsp; There seems to be spending provisions here that should be part of a different kind of budget (e.g. could some of these proposals turn into &quot;pork&quot;)?&nbsp; Many students of politics know that this bill can be a magnet for determined lobbyists who can spin a tale of &quot;stimulus&quot; into any cause they drum up.</li> </ol> <h3>How Effective Is This Stimulus Plan?</h3> <p>The hefty economic stimulus package is jampacked with provisions that try to please everyone. According to <a href="http://www.cnn.com/2009/POLITICS/02/13/stimulus.winners.losers/">this CNN report</a>, the big &quot;winners&quot; (whose piece of the stimulus pie grew larger by the final version) were in the areas of transportation, health and science whose allocations were in the multi-billions. As for us regular people, <strong>we'll be awaiting tax cuts to the tune of $400 per individual or $800 per family. <br /> </strong></p> <h4>Issues With The Tax Cuts</h4> <p><strong> Do you wonder whether this bill will be effective enough to resuscitate our crippled economy?</strong>&nbsp; Will there even be enough consumer spending done at all?&nbsp; Tax breaks and tax deductions are nice, but the question remains whether the general population will actually be putting that extra money to good use.&nbsp; Here are just a couple of scenarios that can potentially deflate the consumer spending goals of this stimulus plan.&nbsp; What if:</p> <ul> <li><strong>We spend the stimulus money on the wrong things.</strong>&nbsp; Apparently, the first wave of <a href="http://www.wisebread.com/how-to-turn-an-1800-stimulus-check-into-1980">stimulus checks</a> didn't really achieve its desired effect. The spending was misplaced, with reports surfacing that consumers where using the money on imports.&nbsp; So let's see how that works: we borrow money from foreign interests, from which we get funding for our economic stimulus checks. Then we turn around and spend the bucks on things manufactured abroad.&nbsp; A vicious cycle if I ever saw one.</li> </ul> <ul> <li><strong>We bank our tax credits.</strong> What if people collectively take a step towards self-preservation, and decide instead, to keep and save the money they receive from the government?&nbsp; Then any economic stimulation won't be coming from the consumers and those tax cuts will be for naught.</li> </ul> <h4>Issues With Government Spending</h4> <p>Well, we can at least expect that there's going to be some serious guaranteed government-funded spending. We can count on the majority of the package that's dedicated to national spending to hopefully get us out of the doldrums. Just please don't let the rumors be true that multi-millions will be going to <a href="http://www.gop.gov/wtas/09/02/11/drudge-300-million-in">green golf carts</a> for government officials or to save the endangered <a href="http://www.mercurynews.com/peninsula/ci_11696283">salt marsh harvest mouse</a> (a noble cause for a different budget).&nbsp;&nbsp; </p> <p>Our debt load has ballooned to an astonishing 1.5 trillion in just a year if you add up Bush's bailous and TARP funds to Obama's bill. Maybe we should enjoy our tax cuts now while we can, because we'll be paying the financial piper for a good long while.&nbsp; <br /> &nbsp;</p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/silicon-valley-blogger">Silicon Valley Blogger</a> of <a href="http://www.wisebread.com/the-economic-stimulus-bill-will-the-heavy-debt-be-worth-it">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/self-sufficiency-self-reliance-and-freedom">Self-sufficiency, self-reliance, and freedom</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-you-do-with-13-extra-a-week-0">What can you do with $13 extra a week?</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/peak-debt">Peak Debt</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-does-the-fannie-mae-and-freddie-mac-bailout-affect-you">How does the Fannie Mae and Freddie Mac bailout affect you?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-us-government-wants-you-in-debt">The U.S. Government Wants You in Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Debt Management debt economic stimulus bill Economy government spending stimulus tax breaks Tue, 17 Feb 2009 18:16:09 +0000 Silicon Valley Blogger 2848 at http://www.wisebread.com