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The Standard Deduction May Be Costing You – This technique could save you plenty
The Standard Deduction May Be Costing You – This technique could save you plenty Many taxpayers default to the standard deduction when filing their tax return because of its simplicity. Unfortunately, this often creates a higher tax bill. Here is a tip to ensure it does not happen to you. Only about a third of Americans file income tax returns using itemized deductions. Unfortunately many of those who don’t itemize are overpaying their taxes. Don’t wait until tax time to figure out if itemizing your deductions yields a lower tax bill. Start now to review your situation and plan for
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Avoid a Debt Settlement Tax Surprise
Avoid a Debt Settlement Tax Surprise Reaching a settlement on your debt comes with important tax consequences. The number of Americans struggling with high debt is increasing, according to the U.S. Federal Reserve. U.S. household debt reached a new record this spring, the central bank said, with the average indebted household owing more than $16,000 on their credit cards. Seeking debt forgiveness from lenders is one option to try to deal with the burden of high debt. But there is an important tax consequence: Any amount of cancelled debt is generally taxed as ordinary income. This can come as a
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Avoid the 10% Early Withdrawal Penalty – What every Traditional IRA owner should know
Avoid the 10% Early Withdrawal Penalty – What every Traditional IRA owner should know While it is not a good idea to tap retirement accounts prior to retirement age, sometimes it cannot be avoided. What can often be avoided, however, is the punitive 10% penalty for early fund distributions. Outlined here are exceptions to the 10% penalty rule for Traditional IRAs. It is one thing to be taxed on retirement contributions and their related earnings when you withdraw funds from your Traditional IRA, it is quite another when you pay the tax PLUS a 10% penalty for early withdrawal. Need
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Lower Your Taxes THIS YEAR! – Here are 6 ideas that most people can use
As Congress debates tax law changes, and we watch the give and take like its a bad soap opera the clock keeps ticking towards the end of the tax year. So what can you do? Here are some time tested tax reduction ideas. While 2012 winds down, there is still time to reduce your tax burden. Here are six ideas that can save money for most of us. Pre-tax Savings. Take advantage of opportunities to set aside income on a pre-tax basis. This includes participation in company sponsored retirement savings programs, Health Savings Accounts (HSA), and “Flex Benefits” accounts that
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No Check! Where’s Your Proof? – What to do about your need for documentation
Very few banks return your cancelled checks. So what do you need to do if required by the IRS to prove your deductions? Often this means staying ahead of the game at year-end. Year-end is a good time to ensure you have proper documentation to substantiate your tax deductions. This is important as many banks start deleting online documentation that is over one year old. Background Two things have happened over the past ten years that have greatly reduced the ability to have a canceled check as proof when the auditor comes calling. The first is the advent of online
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You Can’t Deduct that Loss. It’s a Hobby. – How to ensure your business is not
The old and fast rules to determine whether your business activity is deemed a hobby in the eyes of the IRS have been replaced by guidelines. Here is what you need to know as you wrap up your business year. You’ve loved dogs all your life so you decide to breed them and start a dog training business. Is this a business in the eyes of the IRS or a hobby? Knowing what the IRS is looking for and properly positioning your small business can save taxes and headaches if you are ever questioned by the IRS. Why should you
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Identity Fraud Epidemic Hits the IRS – Are your records safe?
Identity theft has found a new target in a big way….they’re trying to get your withholdings. Stealing your federal funds is often a lower risk theft than making money selling drugs or using traditional theft. Here is what you need to know. The IRS estimates that it paid out over $2 billion in fraudulent claims for refunds. While the age of e-filing and automatic deposits has sped up receiving our refunds, it has also created a tremendous identity theft problem. Thankfully, the IRS is now paying attention to this problem and is actively using their data matching programs to help
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Check Your Pay. Social Security Changes are Here! – Know your new take-home pay
The temporary tax cut in Social Security expires at the end of the year. What will your employer do? You had better check. When you receive your initial paycheck for 2013 you had better take a close look to see what the payroll department has done with your pay. If you do not, you may be in for a big tax bite at the end of the year. Background For years the Social Security tax was set at 12.4% of your earnings. 6.2% of the obligation was paid by your employer. The other 6.2% was paid by you, the employee.
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2012 Tax Laws Finalized….. IN 2013! – Here is the late breaking news
In a late night session, Washington D.C. put the finishing touches on a tax bill that addresses pre-scheduled 2013 tax changes. Included in the legislation are some provisions that impact 2012. During the wee hours of January 1, 2013 the final touches were made to 2012 tax laws. While the rest of us could not realistically make plans during 2012 for laws passed in 2013, perhaps there is a clause or two that may help you when you file your taxes in the next few months. Here is what you need to know: Alternative Minimum Tax (AMT). The recently passed