taxes

The Saver’s Credit: An overlooked tax boost.

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Need help saving for retirement? The Saver’s Credit can be a big help. Millions of taxpayers are eligible for this tax credit. Far too few of them know it.

According to a new survey from the Transamerica Center for Retirement Studies, just 48 percent of us know about the Saver’s Credit, also known as the Retirement Savings Contributions Credit.

“The Saver’s Credit may help make it easier for people to save because it lowers their federal income tax,” says Catherine Collison, the CEO and president of the Transamerica Institute.

It’s a non-refundable tax credit that could be applied up to the first $2,000 of contributions made to a traditional or Roth IRA, an ABLE account (for people with disabilities), or a 401(k), 403(b) or similar employer-sponsored plan.

“Non-refundable” means that the credit can’t be more than a filer’s federal income tax that year.  The maximum is $1,000 for individual filers and $2,000 for married couples if they file jointly. 

Eligibility is based on age, dependency status and income. More people might be eligible for the Saver’s Credit this year due to pandemic-related employment issues. Here’s how to find out if you’re eligible. 

 

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How to use your 2016 tax refund.

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thThis year I’m not taking the advice from my friend Liz Weston, who says you should treat yourself with 10 percent of any windfall and then put the rest where it will do some good. My 2016 income tax refund will be deposited directly into savings and there it will stay.

Some people believe that tax refund = an interest-free loan to Uncle Sam. Personally, I think a refund makes sense for those who don’t have the discipline to save. Let me define that further: It makes sense if they use the refunds in smart ways.

Here’s an example of a not-smart way: Friends of my daughter’s planned to buy a race-car bed for their toddler son. This despite the fact that she didn’t work and his profession (drywaller) left him unemployed off and on.

A race-car bed. Sure, it would be fun to give that to your kid. You know what else is fun? Not having to worry about how you’ll feed him during during periods of little to no work.

 

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Free income tax advice on Thursday.

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th-2Planning to do your own paperwork this year? Tune in on Thursday for some free advice from Kiplinger’s Personal Finance and the National Association of Person Financial Advisors.

Experts from both will answer your questions via a live webchat between 9 a.m. until 5 p.m. Eastern. You can access the chat via live.kiplinger.com or follow along with the Twitter hashtag #MaximizeMoney.

They’ll be offering expert opinion on some pretty essential stuff, including but not limited to:

 

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Giveaway: The tax season survival kit.

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thThe folks at H&R Block recently mailed out a couple of logo items for the 2014 tax season. Naturally I just had to turn mine into a giveaway – adding, of course, a few artistic touches of my own.

There’s a particularly high snafu potential this year due to the Affordable Care Act. Too, there was the customer service misstep by Intuit, which made major changes to the Deluxe version of its popular TurboTax software in a way some customers didn’t like. (H&R Block responded with an offer of a free replacement product; follow the link for details.)

So in advance of any issues you may or may not have, you should enter to win the 2014 Tax Season Survival Kit. It includes:

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Ticked off at TurboTax? H&R Block can help

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thAt this time of year anger begins to build toward the Internal Revenue Service. We collect W-2s and other paperwork, we dread the tax forms and we resent the United States government.

Some consumers aren’t furious with Uncle Sam right now, but they sure are ticked off at Intuit.

The company made major changes to the Deluxe version of its popular TurboTax software, removing several forms (including rental income and capital gains) and nixing help with filling out self-employment and small business income.

Some consumers who already bought the software have found they must pay up to $40 more for an upgrade. Guess what? They’re not happy about that.

“Generally everybody directs their ire at the IRS. This year, TurboTax is catching the hate,” notes tax journalist Kay Bell.

If you were one of those early birds, don’t despair: H&R Block wants to give you a free replacement product.

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Pay your taxes like the rich.

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51PYxmmqqGL._AA300_In a recent post called “How to be a side-gigger” I noted that the four books mentioned in the article would eventually go up as giveaways.

Here’s the first one: “Outsmarting the System: Lower Your Taxes, Control Your Future and Reach Financial Freedom.”  

Written by former IRS auditor Anthony Campidonica, the slim volume explains several ways that ordinary people can use a group of tax benefits, i.e., those for the self-employed. You could be an entrepreneur (full- or part-time), a landlord or an investor.

What if you don’t have the wherewithal to open a store, buy a rental property or invest like the pros? Start small, the author advises. Sell your expertise or a product on the side vs. quitting your day job and diving in. Or save up for that foreclosure or repo and go the renovation-and-rental route in your off hours.

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My $1 tax refund.

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It’s a little nervous-making to get a letter from the Internal Revenue Service. My first reaction is always, OMG I’m being audited.

Nope. “We changed your 2010 Form 1040 to match our record of your estimated tax payments, credits applied from another year, and/or payments received with an extension to file,” the letter read. “As a result, you are due a refund of $1.”

Some people might think, “A buck? Not worth the gas to take it to the bank.”

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14 frugal uses for an income tax refund.

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I’m getting an income tax refund this year. Well, let me rephrase that. I would be getting a refund, except that I’m applying it toward the quarterly taxes I pay as a freelancer. Whee!

What are you going to do with your refund, if any? My former MSN Money colleague Liz Weston suggests spending 10% of any windfall on something non-essential. So go ahead: Treat yourself.

But don’t let the rest of the money trickle away. Invest it in something, or several somethings, that will benefit you for the rest of the year – or even for the rest of your life.

 

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