Need advice on tax credit, retirement savings? Here are six tips to help.
Your age and your income may make you eligible for tax credits if you make the right kind of payments to a retirement plan, either through your employer or a private scheme.
Six things you need to know about savers credit:
The Savers Credit, also called the Retirement Savings Contribution Credit, is for people with the following 2011 income:
Single people, married couples claiming separately, or widows and widowers, up to $28,250
Breadwinner up to $42,375
Married couples claiming together $56,500
To be able to claim you must be 18 or over, not have been a student full time in the last year, and not been named as a dependent on another return.
If you contribute to an eligible IRA or a 401k or another plan, you may be able to get up to $1000 credit ($2000 for a joint claim). This is calculated as a percentage of the eligible contribution. The high rates are for those with the lowest income.
In your calculations, you need to take off any payouts from your plan due to the contributions you’ve made. This is in the case of payouts received over the two years prior to claiming credit plus the claim year and any time remaining at the end of the claim year before the date due, including extended periods.
Most claimants can deduct at least some money contributed to an IRA.
Tax season is never fun. Man individual, especially if they are self-employed, dread the April deadline. Fortunately, it is possible for almost everyone to at least reduce their tax burden. It simply takes a keen mind and the ability to wade through quite a bit of paperwork. If you do not feel like you fall into such a category, you may want to make sure that you can find someone that will be able to help you. If you are familiar with the system, you should take the time to gather all the necessary data before filing. If not, you should make sure you work with someone that knows taxes well.
Take Your Time
In an era of quick online tax processing, one of the most important tips for a successful tax season is making sure that you take your time. Your taxes do not have to be filed the day your W-2 comes in, and it may be wise to wait a few weeks to gather the necessary information. Search out the relevant receipts from the last year, and do what you can to find out if you can take more than the average deductible. You may find that taking some time to do some research can save you hundreds, if not thousands, of dollars each year.
Whether you have exhausted all other possibilities or simply do not feel comfortable doing your own taxes, you may reach a point at which you have to find a CPA. Fortunately, there are many accounting professionals in almost every area, and finding the right professional can help you to get your taxes done quickly. A great way to find such a professional is to use a business social networking site such as SaleSpider.com. Many professionals use such sites to find clients, and finding a well-recommended individual from contacts on the site is a great way to feel safe with your choice.
If you want to succeed in filing your taxes without having to overpay, you should make sure that you take the process seriously. Do not rush through an online program, and make sure to contact a CPA if you do not feel comfortable filing on your own. Taxes can be complicated, but there is no reason to pay more than necessary merely to avoid trouble. A bit of professional help can often mean the difference between owing money and getting a refund, so always be prepared to seek out the necessary aid.
It’s the start of a new year, and that means it’s time to do last year’s taxes. Are you going to do them yourself, or will you hire a tax professional to do them for you? If you’d prefer to prepare your own tax return, you might want to use an online program to help you. There are lots of different programs available, such as TurboTax and H&R Block. All will help you complete your federal and state tax returns from the comfort of your own home. There are many benefits to using online tax software, and here’s a closer look at some of them.
When using online tax software, all you have to do is log on to your computer. It makes it incredibly convenient for you to complete your taxes whenever is best for you, without relying on the schedule of a tax professional you might hire. Also, completing your taxes online means you don’t need to fill out long paper forms by hand. It’s incredibly easy to type in your numbers, so you don’t have to go out and pick up lots of forms, or waste ink and paper printing them out yourself. Doing your taxes online will streamline the process and cut back on your paperwork.
Preparing your taxes involves a lot of math, and when you do them by hand there’s a lot of room for error. Online tax software will figure out all the calculations for you, and it will almost completely eliminate the possibility of mathematical errors. Making an error could cause a delay or an audit, so you want to get it right the first time. Online software will perform and check the math for you.
When you e-file your tax returns, you can confirm that they’ve been received by the IRS within 48 hours. Online software will help you e-file automatically, and this makes the process even easier. You don’t have to buy postage or worry about your paperwork getting delivered. E-filing will also help you get your refund sooner.
Just because you’re doing your taxes at home doesn’t mean you’re on your own. When you purchase online tax software, many programs offer you support from certified tax professionals. You may have to pay a little extra, but if you’re unsure of something, at least you know you have some back up when you need it. Also, software programs will help you through the process by offering step-by-step instructions and definitions of terms. They’ll suggest ways you can maximize your refund or clue you in to additional deductions that you may qualify for.
Preparing your taxes by yourself with online software can help you save a lot. Purchasing the software will cost a lot less than hiring a tax professional such as an enrolled agent or a certified public accountant. Paying less will help you maximize the net amount of your refund. If you have a very simple federal return, many programs will even let you prepare it for free.
Terry Ford shares tips for saving money and being fiscally secure. She uses the world’s best grammar checker to keep her writing easy for her fans to understand.
Individuals that pay alimony (also known as “spousal support” or “spousal maintenance”) to a former spouse can deduct these payments on their personal federal income tax returns. In turn, the alimony recipient is required to claim the payments as income.
Before a payor takes an alimony deduction they should make sure that their payments meet the IRS qualifications for alimony. Ideally, this was addressed and discussed in detail with their divorce attorney to ensure that the alimony was structured in a way that would allow a deduction. If you are not sure whether your payments are deductible you should consult with a family law or tax attorney. Here are some tips regarding what does and does not meet the general requirements for payments to qualify as alimony under the Internal Revenue Code.
Alimony is Formally Mandated
According to the IRS, alimony payments must be mandated by a legal settlement agreement or court order to qualify for the tax deduction. This means that there must be a legally binding agreement, such as a temporary support order, separation agreement or divorce decree, that describes and mandates the support provided by one spouse to the other. The IRS does not consider voluntary, informal payments of money to a spouse or former spouse to be alimony.
Child Support Is Not Alimony
Child support is not alimony and those who pay child support cannot deduct these payments from their income. Under federal tax laws, child support is not tax deductible by the parent who pays it, and does notneed to be reported as taxable income by the parent who receives the payments.
Cash Payments Only
Non-cash property transfers don’t count as alimony and cannot be deducted from one’s taxable income. Alimony must be paid in cash, or by check or money order, in order to satisfy the statutory requirements.
Third Party Payments
In some cases, court-ordered payments to third parties can be considered alimony and are therefore tax deductible. Examples of this include rent or medical expense payments. In addition, payments made on taxes, mortgages or insurance may also be entirely or partially tax deductible if treated as alimony under a divorce or separation agreement.
Complications Can Arise if You Still Live With Your Ex-Spouse
According to the IRS, a person who is legally separated from his or her spouse, yet still lives in the same home with him or her cannot normally claim a tax deduction on alimony payments. An exception to this rule exists when one spouse leaves the home within one month after receiving an alimony payment. In those states that recognize legal separation, those who are still living with their former spouse and have a legally binding support agreement but are not legally separated, should talk to their attorney or tax adviser to find out whether their payments qualify for a deduction.
About the Author
Scott Morgan is a board certified Austin divorce lawyer who regularly blogs on the subject of divorce and family law. You can read his blog at AustinDivorceSpecialist.com.
There are many tax breaks that get overlooked, but homeowners often overlook the most obvious deductions. The truth is, as a homeowner, you stand to save hundreds if not thousands off your taxes. However, it all boils down to knowing what you qualify for. The following are just some of the tax breaks homeowners may be missing out on.
The interest you pay on your mortgage should be one the first tax breaks you take advantage of. Those filing single can deduct mortgage interest on homes up to $500,000 ($1 million for married couples). This will require a bit more work because you will need to itemize your deductions, which means you should see an accountant.
Sometimes people are required to pay points on their mortgage to get better rates on their loan. These points may offer a tax break if they meet certain requirements. First of all, points must be allowed in the area where the home was purchased. Second, the mortgage must be for a home that is being bought or built as a main residence. The deduction must also be taken the year the loan to buy a home was obtained and the points cannot be out of the normal range.
Each year, for as long as you own your home, you can deduct the amount of your property taxes. With most loans these taxes make up a percentage of your monthly payment and are set aside to be paid once a year. You will receive information on the cost of these taxes when you receive information about the interest from the lender.
The Mortgage Forgiveness Act extends through 2012 and allows those that fell into foreclosure the ability to not pay taxes on the forgiven amount. In most cases, forgiven debt is taxed as income. Those that restructured their loan also qualify. The amount forgiven is up to $2 million for married couples and $1 million for single homeowners.
Tax-Free Capital Gains
A capital gain occurs when something is sold for a profit. With most capital gains, the seller is taxed on the amount gained. However, with residential real estate, the homeowner may qualify for a tax break on the first $250,000 ($500,000 if married) of the gain.
Energy Saving Improvements
Last, but certainly not least, homeowners making improvements to their property, in order to have a more energy efficient home, can also take advantage of tax breaks. There are a number of items that qualify ranging from windows to roofing and you may be able to deduct up to 30% of the costs from your taxes up to $1500.
As a homeowner, it pays to take advantage of these tax breaks. While this may mean getting the assistance of a professional accountant, it also means saving hundreds, if not thousands, of dollars.
About the Author: Dennis Allenbaugh is a mortgage specialist who loves seeing people benefit from homeownership each year. He recommends sites like Home Loans Australia and others to those looking to qualify for a home loan. Now’s the time to start thinking about purchasing a home.
According to emerging news reports, Romney has a vast amount of wealth invested in funds through Bain Capital LLC. This powerhouse is one of the offshore tax havens often used to help lower the 2012 taxes. Several of the Bain funds have connections offshore that are allowing the financial elite to take advantage of tax breaks.
These news sources are interested in dissecting Romney’s tax returns to see how his use of offshore strategies has allowed him to avoid taxes. Investments by Romney and others in Bain funds, have money scattered from Delaware, to Bermuda, the Cayman Islands, Ireland and Hong Kong, according to sources at Reuters News Group.
The question is if these things add up to the charges of tax evasion or avoidance of taxes. While corporations do not pay taxes on the income unless the money is repatriated, individuals do. The findings of this investigation could have a negative impact on Romney’s campaign.
There are limited numbers of ways to shelter one’s income offshore and these ways are generally transparent as offshore income sheltering. The IRS has become very skilled at locating these attempts and these people are generally required to pay the taxes on the earnings.
If indeed, the investments are listed on Romney’s tax return, then they cannot be the tax haven that others once found in offshore investments. While the tax code is complex and Bain may have found a structure allowing some sheltered income, that structure should not be included on the Romney’ or anyone else’s tax return.