money sectionmoney section
They say there are only two things certain in life: death and taxes. But even with taxes, your must-dos in a given year are far from certain, thanks to annual tax code changes and other trends. Some of the biggest changes for 2013, though, are in tax technology. Consumers and professional tax-preparers have access to more advanced software that makes for faster tax preparation, a more accurate return and -- if you’re lucky enough to be owed one -- a speedier refund. We talked to tax experts about five changes taxpayers should keep an eye on.
How lotto money is taxed depends on a number of different factors, including where you live. Find out how lotto money is taxed with help from a certified financial analyst in this free video clip.
For federal income tax purposes, the IRS treats trusts as taxpayers that are separate and distinct from its beneficiaries and grantors. The general framework of the tax rules requires trustees to file annual tax returns on Form 1041 to report all income and to pay the appropriate tax. However, when the trust distributes the money to beneficiaries within the same tax year, the responsibility for paying tax can shift from the trust to the beneficiaries.
A 401(k) account can come in many varieties and impose multiple restrictions on the employers that offer them and the employees that use them. However, their primary benefit is that they make it simpler for you to save for your retirement. Unless their is a court order that says otherwise, when you open a 401(k), you are the payee; accordingly, when the enrollment form asks you for your name, you are naming the payee.
The Internal Revenue Service (IRS) allows you to claim some environmentally friendly home improvement costs on your federal tax return. These qualifying expenses are claimed as a tax credit on tax Form 1040. A tax credit is even more advantageous than a tax deduction because a tax credit is a dollar-for-dollar reduction in the amount of tax you owe, whereas an itemized deduction lowers your taxable income.
When you receive money from a deceased parent's estate, part of the money you receive may be taxable. Depending on where you live, you may have to pay taxes on your inheritance. In some cases, the amount you receive will be impacted by estate taxes imposed before you receive it.
A large prize may seem like good luck when you win it, but it can turn into a headache at tax time. The Internal Revenue Service requires you to report prizes over $600 as part of your gross income, usually resulting in additional taxes. Ignorance of this requirement does not get you off the hook. If you fail to report prizes on your original return, filing an amended return quickly may minimize the damage.
A 401(k) is a qualified pension plan, which means that it allows you to save your money tax-free until you take a distribution from the account (i.e., withdraw funds). The money you contribute to your 401(k) comes from your pay before other taxes are deducted. Therefore, you do not pay income tax or capital gains tax on investments held inside the plan until you cash in your account.
Most taxpayers use their tax refund money to pay off bills, take a vacation, buy a special item or for a future purchase. Many want to receive their refund as quickly as they can and get entangled in a refund-anticipation loan that costs them extra money. The Internal Revenue Service has reduced the time it takes to get your tax money by making electronic filing quick and easy to use. Following a few simple steps can put your tax money in your hands and keep the funds secure without a snag.
Getting married doesn't automatically save you money on your taxes. It depends on your earnings and other factors involved. The tax breaks involved with tying the knot are highly individualized, but according to MSN Money, approximately half of all married couples will pay less in taxes than they did when they were single.
The person who establishes a living trust is the trust grantor. Also known as a revocable grantor trust, the grantor of the trust retains ownership rights to the trust property and has the right to modify, revoke or amend the trust at any time. Since the trust grantor retains these rights, the Internal Revenue Service (IRS) treats the grantor as the owner of the trust property for tax purposes, which includes charitable giving.
Although a death in the family can be tragic, it leaves the opportunity for the survivors to share in the decedent's legacy through inheritance of assets. Unfortunately, the process of inheriting an asset is fraught with tax considerations and tradeoffs. Having a good tax attorney and CPA can help to both streamline the process and minimize tax liability.
If you work for a for-profit employer, you may have the option to defer some of your salary into a 401(k) plan. Before deciding whether you want to contribute and how much you want to contribute, you need to understand both the advantages and disadvantages of 401(k) plans to decide whether they are right for you.
When shopping for a car, you may come across a seller that promotes a "buy here, pay here" financing model. With this type of financing, you can usually qualify for a car loan even if you have bad credit. At the same time, this type of financing is typically not as attractive as regular financing if you have good credit.
The Internal Revenue Service treats income that you earn outside of a job as business income or hobby income, depending on the financial circumstances surrounding the income. You can take greater tax deductions on business income than on hobby income, but you must pay higher taxes on it as well.
When people consider giving to charities, they usually do so primarily to help a righteous cause but the fact that charitable giving is tax deductible presents an extra incentive to get people to commit their funds. Before doing anything based on a tax deduction, you should understand exactly what type of deduction you will receive and how much money you stand to save. Some people hear tax deduction and think that any money they give away will essentially be recouped by paying less taxes. This is not true. Tax deductions shrink the pool of taxable income you owe, but you…
If you receive a lump sum payment as a result of an inheritance or an early retirement buyout package, you need to handle that money properly. Failing to take care of that money the right way could leave you without the funds you need to live on. The best way to invest that lump sum payment depends on a number of factors, including how you plan to use the money and what your immediate and long-term needs are.
When you retire, your employer may give you the option of taking your pension as a series of future payments or in one lump sum. Taking the lump sum payment means you can invest the money as you see fit, and even pass it on to your heirs if you wish. But that lump sum payment option also means that you will be totally responsible for the money, and that you will need to exercise caution to avoid running out of money.
When investing in a 401k, it is important to balance the risk of loss with the reward of higher returns. If you want to err on the conservative side of the investment spectrum, there are several ways to protect your principal and ensure that the money you put aside for retirement will be there when you need it.
Collecting rare dolls, coins and stamps, or making craft items and selling them can subject you to Internal Revenue Service tax reporting requirements. If you collect items with the intention of selling them at a later time for profit, educate yourself on IRS regulations to avoid an audit down the road.
You do not need to give up investing in your 401k plan just because you are nervous about the stock market. Even if you feel that stocks are poised for a huge drop, you can still keep stashing money away in your 401k, enjoying the tax savings that come with that investment as well as the potential to build a substantial nest egg you can draw on when you retire. Most 401k plans include a number of options that are not affected by the stock market.
The Internal Revenue Service's (IRS) federal gift and estate tax rules determine whether an inheritance is a taxable gift. For amounts exceeding the IRS threshold, a decedent's estate is subject to estate tax. Since laws may frequently change, seek the advice of an attorney licensed to practice in your jurisdiction.
No matter what your age or income, you need to start investing for your financial future. Investing in stocks, bonds and other types of investments can be very rewarding, but over time taxes can take a big bite out of your return. Adjusting your investments to minimize this tax burden can leave you with more money in your pocket and a bigger nest egg down the road. Investors can use a number of strategies to minimize their taxes without impacting the return on their investments.
Companies offer their employees 401k plans to help them save for retirement. These plans offer the advantage of contributions made with pretax dollars, and the money grows in the account tax-free until it is withdrawn. However, despite the tax advantages, 401k plans have several drawbacks you should be aware of when contemplating how much to contribute.
Getting a lump sum of money through an inheritance, lottery winning or settlement may seem like a dream come true, but once the money is in your hands, the question arises on how to invest it and make it last. There is no one answer to this question, making the solutions that much more difficult. However, there is a systematic way of determining what the best investment options for your personal situation are. Remember, you may only get one lump-sum payment in a lifetime, and once it's gone, you may never recoup it, so prudence is required.
Roth 401k plans were introduced in 2006 as an alternative to the traditional 401k plan. Roth 401k plans are offered by employers to their employees to assist them in saving for retirement. The Roth 401k offers a number of benefits including tax benefits, large contribution limits and less eligibility restrictions.
Adjusting a W-4 form is easy. Changes can be made to your withholding allowances at any time and it is easy to do. Although there are many reasons to adjust your withholdings, I want to focus on doing so in order to save money. Follow my tips this year so that you are not giving Uncle Sam an interest free loan out of your own pocket!
A seven-year annuity is a form of deferred taxation savings product. In the way that most people use a seven-year annuity, it isn't really an annuity, although it does conform the the legal requirements to be defined as one--that's what provides the tax benefits.
Income gained from your portfolio of investments is typically classified as portfolio income. It can be a major source of income for some people who invest heavily, and portfolio income has important tax implications.
The Internal Revenue Service (IRS) allows you to check the status of your tax refund securely on the Internet with the “Where’s My Refund?” feature at IRS.gov. You can use the service to track your refund whether you are expecting a paper check or a direct deposit to your bank account. Your refund status is usually available online within 24 hours after the IRS confirms receipt of your e-filed tax return, or within four weeks after you mail a paper return, according to IRS.gov.
Annuities are a special type of financial product offered by insurance companies that pay out income either as a lump sum or periodic payments sometime after the account holder makes an initial lump sum deposit or several smaller deposits over time. Annuities are used as a retirement savings vehicle, since they can offer several attractive benefits.
Whether your IRA account falls under the protection of federal insurance depends on the types of accounts you put your money in. Federal insurance is run by the Federal Deposit Insurance Corporation, or FDIC.
There are two different types of retirement accounts--qualified and non-qualified. Knowing the differences between the two can help when evaluating sound retirement planning methods and asset allocation tactics, as well as calculating tax planning strategies. Whether a retirement account is qualified or non-qualified will influence the owner's choice of the withdrawal amounts and the schedule of those payments.
The federal government's inflation figures, as measured by the Consumer Price Index, invariably underestimate the real costs to ordinary people. The effects of rising prices, the most easily understood definition of inflation, are widely felt.
If you've changed your style or lost weight, you may have many clothes in your closet that you never wear. Don't let them sit around and clutter up your storage areas. There are several ways to turn your unused clothing items into cash.
Each homeowner's property tax is based on the assessed value of the home. During economic downturns, the real value of homes often declines. In such circumstances, you may seek a reassessment of your home toward the objective of having your property tax lowered. The method for lowering your property tax will vary by location, but a few essential elements of the process will be the same no matter where you reside.
Organization and good record keeping is the main secret to saving money on taxes. Understand what type of organization is important for saving money on tax returns with tips from an experienced tax professional in this free video on tax deductions.
Bonds are conservative financial instruments used for saving money and earning interest, and are used by municipalities to raise money from their tax payers. Learn more about bonds, their different ratings and how each earns interest with tips from a registered financial consultant in this free video on finance and investment.
It is a good time to reassess your county property taxes and save. Most homeowners do not realize that the last time their property was assessed for taxes may have been when their home value was much higher. Thus, contacting your county tax assessor for a property value reevaluation may save you hundreds in property taxes. The assessed value of a property cannot exceed the fair market value, so state law provides a way to reevaluate the assessed value when the market declines. To see if you may qualify for a county property tax reduction, follow a few simple steps.
There are many things you can do to lower your tax bill. This article shows you how.
Nobody likes paying income taxes, but they are a necessary evil. Income taxes pay for programs like critical infrastructure, national defense, social and education programs, to name a few. Try these ideas to trim your income tax bill. With any luck, you'll get a refund.
One of the benefits of a 401k plan is short-term savings on income taxes. Pre-tax money contributed to a 401k allows you to subtract allocated money from your total annual income for a lower tax burden. You need to calculate pre-tax contributions to your 401k by looking beyond the immediate benefits to your first distributions upon retirement.
Fulfill your desire to help others by making tax-deductible donations. The good news about charitable donations is that you can deduct them from your income taxes, which in most cases will save you money. With such an outcome, how can you afford not to give?
