All Articles Tagged "tax tips"
It’s that time of year again, where we gather all of our important documents to file our annual taxes before the upcoming deadline. Many may decide to splurge with their refunds, while others decide to make wiser choices with their money. What will you decide? Before you make that call, if you have children, you may want to check out these savvy uses for your tax money.
Start A College Fund. More likely than not, your child will continue their education after high school. Whether it’s college or trade school, the cost of going to school is expensive. Sure, there are options such as taking out a school loan or lending against the equity of your home. But, if at all possible, you don’t want to go into debt for school.
Use your tax refund to open a college fund for your child. There are many options such as a 529 Plan or a Coverdell Education Savings Account. Both options allow you to withdraw from the account once your child needs it for school, tax free.
*Set up an appointment with a financial planner to discuss which options are best for you.
Create Your Own Day Care Escrow. If you are one of many who has to pay out weekly for child care or after-school care, you may want to open a designated account to allocate money for this bill. Calculate your monthly cost and put away designated amounts — three, six, or nine months for example — to help lighten the burden of this strenuous cost.
Open a Savings Account With Your Child. It is very important to teach your child how to be responsible with their money. One of our fondest memories as children was the day our parents took us to the bank to open our very own account. We learned the basics of money. Which is to save, spend, and give some away to charity. To this day, this is the primary reason why we are good stewards over our money.
Take a trip down to your local bank. Sit down with a banker and discuss which account would be the best to open for your child. Most minor accounts are free and don’t require any extra steps such as direct deposit to waive a monthly fee. Don’t forget to bring your child along. It can be a great learning experience for you both.
Set Up a Will. Regardless of how much in assets that you have, a will should be established. A will leaves your loved ones with specific instructions on how you want your estate handled. Your will is where you will designate a guardian and instructions on how you want your minor children to be taken care of in the event you are no longer able to care for them.
*Seek the advice of an attorney to set up a proper will.
Invest in Music Lessons. Studies have found that a child who plays a musical instrument can enhance their learning abilities. If you notice your children showing interest in music and instruments don’t ignore it. If your child can’t participate in learning an instrument at their school, look for one-on-one lessons with an outside instructor.
Our children are the future. If we take the time out now to invest in them, they will make a difference in this world. Before you know it, they will be leaving the house for college to start their own lives and make their own paths. Aren’t your children worth your tax dollars?
Tai and Tarin Perry, the Double Saving Divas, are financially savvy identical twin sisters, and investment bankers turned money saving experts. You can also connect with them on their Twitter, Facebook, and YouTube Channel.
And join us and the Double Saving Divas this Friday at 3pm ET for a Facebook chat, where we’ll be answering all of your money questions. Click here to tune in.
Tax season is generally a time that no one looks forward to. But the sooner you get them done, the sooner you can breathe a sigh of relief and wait for your tax return check to roll in. But before you dive into handling your tax return yourself, MSN notes that you should first ask yourself these three questions:
1) Do you have the time to do your taxes? The IRS estimates it takes about 22 hours for a simple return.
2) Can you afford to hire someone to do your taxes?
3) If not, are you ready to handle the difficulties of understanding the complex federal code? Electronic filing has made this easier, but there are still some things you’ll need to figure out.
If you’ve come to the conclusion that filing your own taxes is still the way to go for you, then take our 10 tips for doing your own taxes… successfully.
Your brain might be filled with turkeys, cranberry sauce, and Black Friday doorbusters, but don’t forget your taxes!
Black Enterprise reminds us that with the coming year-end, tax season arrives. So now’s the time to make preparations for your returns.
“Did you look for a job this year? If so, you can deduct travel expenses, continuing education expenses and resume prep. Even those copies made at Kinkos can be deducted if you keep the receipt,” the article says.
There are also lots of steps you can take to make a better overall impression with the IRS. For more about how you can get your numbers in order, click here.
It’s just a blip in time—a line you do or do not fill out, or a question that you answer either yes or no to—but it can cost you hundreds of thousands of dollars. I’m talking about missed deductions. Often, even if you have your taxes professionally done, your H&R (or what have you) expert doesn’t ask you questions that would save you tons of money. So, you’ve got to be prepared yourself. Be aware of these often over looked possible deductions. You probably qualify for more than you think.
(Kiplinger) — The rites of summer: lawn chairs, sunscreen, ice tea, fireworks, tax returns . . . What?! Yep, tax returns. “Now is a great time to do planning for 2011,” says Kathy Pickering, executive director of H&R Block’s Tax Institute. “You have half a year left to make some adjustments.” By getting a jump-start on your tax planning, you can employ a number of strategies that will trim your tribute to Uncle Sam. Perhaps you can position your investment portfolio to reap capital-gains breaks. Or you can arrange for home improvements that are medically necessary — and tax-deductible. Your first tax chore is to check the bottom line of your 2010 return to see if you should change your tax withholding or revise your estimated tax payments. The average refund for 2010 rose to a record $2,900. If you got a big refund, don’t consider it a bonus. Instead consider cutting back on what you’re paying the government for the rest of 2011. If you owed a bunch of money, maybe you should up your withholding.
The cost of education is frankly frightening. Today a year at a private college runs an average of $26,000, a price that promises to keep edging upward, even if the economy doesn’t follow suit. Offsetting these costs is more important than ever and one place where savings are hiding is the tax code. Whether you’re eyeing a master’s degree, paying off student loans or trying to get ahead of the curve by saving for your child’s education now, the government offers a number of incentives to lighten the load.
American Opportunity Credit
Part of the 2009 American Recovery and Reinvestment Act, the American Opportunity Credit is an expanded version of the former Hope Credit. It’s worth up to $2500 per student for expenses paid during the first four years of college, vocational school or other eligible educational institution. In addition to tuition and fees it covers course materials like books, art supplies, and protective lab gear. To be eligible for the full credit filers must have an adjusted gross income of no more than $80,000 ($160,000 if filing jointly); after this point the value declines until it is eventually phased out.
(Forbes) — The truth is when you lose a job, are looking for a new one or changing careers, it’s critical that you pay attention to the tax implications. So here goes, a little bell ringing, if you’re in the midst of preparing your 2010 return… or keeping track for your 2011 filing for that matter. I highly recommend, of course, you go to the IRS site for in-depth help and depending in your situation, consult a tax professional. In the meantime, if your work life was in transition last year, here are some tax prep reminders:
1. Severance pay is taxable. If you accepted a severance package and benefits when you parted ways with your former employer, or were paid for unused vacation and sick leave, that’s considered taxable income. If you expect these payouts in 2011, be sure enough taxes are withheld from these payments, or make estimated payments. See IRS Publication 17, Your Federal Income Tax, for more information.
(The Network Journal) — If you were among the millions out of work at any point in 2010, your tax return may look quite different this year. Many people fail to realize that they must pay taxes on unemployment benefits. For 2010 all unemployment benefits received will be considered taxable income. That is a big change from 2009 when a temporary exemption was granted for the first $2,400 received. Some states withhold part of the unemployment benefit so recipients don’t get socked with a big tax bill, but that’s not a requirement, said Melissa Labant of the American Institute of CPA’s tax team. That means you might be on the hook for taxes on the full amount of your benefits. Fortunately, there’s a host of deductions and tax credits that can help offset any tax you owe, or increase your refund.
Job search: Certain expenses can be deducted if you’re looking for a job in your most recent occupation. That means similar job titles in different industries, like administrative assistant or customer service manager, would qualify. Costs for a search that enabled you to switch from being an elementary school gym teacher to a restaurant chef wouldn’t make the cut. Fees for resume preparation, job counseling and employment agencies may be claimed. And, if you kept a log of telephone calls, you may be able to claim a portion of your phone bill.
(Wall Street Journal) — Report all of your income. The IRS uses information returns, such as W-2s and 1099s, to cross-check income reporting. Under its document-matching program, the IRS’ computers compare information on the forms with the income reported by taxpayers on their returns. If the information doesn’t match, this leads to an automatic audit. But don’t panic; it’s merely a correspondence asking about the discrepancy. It can be easily cleared up by submitting an explanation by mail if you think you are correct, or paying the tax owed if the omission was your oversight and the IRS is correct.
(Wall Street Journal) — It isn’t just the estate tax that’s scheduled to return on Jan. 1 after a one-year absence. A lesser-known companion levy will return as well: the generation-skipping transfer tax. Not surprisingly, affluent families are rushing to transfer wealth to their progeny before the year-end deadline. But while sidestepping the GST tax may seem like a smart move, investors need to structure and time gifts to minimize the risks of a future tax hit. First enacted in the 1970s, the GST tax is designed to prevent wealthy families from giving assets to grandchildren instead of children in order to trim their tax bills. Donors can transfer a limited amount free of GST tax to relatives two or more generations their junior, or to nonrelatives at least 37½ years younger. (In 2009, that amount, known as an exemption, was $3.5 million.)