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Tax Surprises for Newly Retired – 5 surprises to know about
Rebalancing your portfolio when you get older makes sense. So does anticipating for these possible tax surprises during your retirement years. You’ve got it all planned out. Your retirement savings plans are full, you have started receiving Social Security benefits, and your Pension is ready to go. Everything is planned, what could go wrong? Here are five surprises that can turn your plan on a dime. 1. Health emergency and Long-term Care. When a simple procedure could cost thousands, health care costs can put a huge dent in your plan. Long-term care can cost thousands per month. Have you planned
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Is Being Effective Better Than Being Marginal? – Understanding the difference
What is the difference between a Marginal Tax Rate and an Effective Tax rate? Who cares? You might if you add a second job and see some of your tax benefits disappear. Here is what you need to know. The tax code is filled with terms we rarely use in everyday conversation. Two of the more common are Marginal Tax Rates and Effective Tax Rates. Knowing what they mean can help you think differently about your potential tax obligation. Definition Marginal Tax Rate: This is the tax rate applied to the “next” dollar you earn. Since our income tax rates
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Often Overlooked Medical Expense Deductions – Avoid taking the easy way
Because of the paperwork required and the Adjusted Gross Income threshold required prior to taking a medical expense deduction, many taxpayers do not keep track of their medical expenses. This approach could be costing you money. Here are some oft overlooked items. To take your medical expense deduction in 2012 your allowable expenses must exceed 7.5% of your Adjusted Gross Income (AGI). In 2013 and beyond, unless you are 65 or older, this amount goes up to 10% of AGI. So why bother? You might be surprised at how much this expense might be. Here are some tips: Don’t take
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Avoid Common Tax Filing Mistakes
Avoid Common Tax Filing Mistakes Want to ensure your refund gets to you in the shortest amount of time? Want to avoid a letter from the IRS? Here are some of the most common Tax Filing Mistakes: Forgetting a W-2… With the backlog of tax return filing due to late changing tax laws, want to ensure your refund gets to you in the shortest amount of time? More importantly, how can you avoid receiving a letter from the IRS? Here are some of the most common tax filing mistakes: Forgetting a W-2 or 1099: The IRS does an effective job
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Don’t Die Here – Estate tax surprises at state level
So you think you will avoid federal estate taxes? That may be so, but 21 states and the District of Columbia are also looking to tax your estate, your inheritance, or both. Where you live could make a big difference. Recently passed federal legislation increased the exemption amount before your estate pays taxes on your assets when you die. The amount for 2013 is $5.25 million. This makes most of our estates tax-free when we die. Or does it? Where you live could cost you a bundle in inheritance and estate taxies since 21 states have some form of estate
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Are My Social Security Benefits Taxable? – Don’t be surprised at tax time
The taxability of Social Security Benefits can be confusing. In fact the taxable nature of your benefits should include a discussion of benefit reductions when you decide to receive these benefits prior to your full retirement age. Here is what you need to know. When it comes to retirement many Americans believe they can count on their full Social Security benefits as a core element of income. You can imagine the surprise at tax-time when some of these same benefits are returned to the Federal Government in the form of benefit reduction and taxation. Here is what you need to
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Time to Think About Commuting – Don’t leave this benefit on the table
With the high price of gas, wouldn’t it be nice to see a tax benefit to help reduce the cost to get to and from work? Perhaps there is, you may just need to check with your employer. $3.40 to $4.00 per gallon gas prices are quickly becoming the new norm. Congress and the President appear to be doing very little to control this inflationary cost. What can you do? Thankfully there are commuting benefits that can lower your cost of getting to and from work during 2013. Transit Passes: up to $245/ month Van Pooling: up to $245/month Parking
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Educational Credits Fail IRS Test – More return processing delays
Hold onto your hats, the processing of tax returns in 2013 will be a bumpy ride. Here is another delay in the processing of Federal Tax returns impacting those filing for educational tax benefits. If you have a tax return that will utilize a number of common educational credits, your tax return cannot be processed by the IRS until mid-February. Affected tax returns include any provisions found on Form 8863 and include: The American Opportunity Tax Credit The Lifetime Learning Credit This delay does not impact tax returns with other educational tax benefits like student loan interest deductions or the
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New Safe Harbor for Home Offices
Do you have a home office? Are you interested in saving time filing keeping track of your expenses? A new safe-harbor rule effective in 2013 might just make tracking your home office expenses a lot easier. Outlined here are the new rules. Beginning in 2013 there is a simplified way to take a home office expense for a portion of your home. This new ‘safe-harbor’ option greatly simplifies how to record valid expenses for business use of your home. Here is how it works. You may opt to take your office space square feet times $5 and use this as
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Tax Filing Season Starts January 30th – A late start due to late law passage
When Washington makes retroactive law changes in the 11th hour, it causes havoc on the thousands of those who must create tax forms, modify instructions, update tax software and get all the programs ready to prepare taxes. The IRS has let us know their timeline for tax return readiness. Here is what you need to know. “We have worked hard to open tax season as soon as possible.” – Acting IRS Commissioner Steven T. Miller The IRS recently announced that it is targeting January 30th as the first day it will begin processing 2012 tax returns. This delay in filing
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