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November 27, 2013

Charitable Gift Giving

The holiday season is a wonderful time of year that brings feelings of wanting to "give back" to our community and wanting to make a difference in someone's life. Unfortunately, thieves oftentimes take advantage of this goodwill and may pose as a real charity in order to steal money or to get private information to commit identity theft. Below is a list of how thieves prey on their potential victims and what you can do to avoid being a victim this holiday season.

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April 30, 2013

Planning Next Year's Tax Return

Was tax time stressful for you this year? Why don't you make things easier for next year's tax filing by getting ready for it now? There are a number of things you can do so that next year you can avoid the last minute race to get it done. Below are a few things that you can start doing now.

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April 18, 2013

Miss the April 15th Tax Filing Deadline?

Did you miss the tax filing deadline? The only thing you can do now is to quickly cut your losses by filing now. On the positive side, if you were due a refund you will not have a penalty for filing a late return. If you do owe taxes you should file ASAP and pay as soon as you can to minimize any penalty and interest charges. Here are a few more thoughts to keep in mind as you sit down to file your taxes.

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April 11, 2013

Paying Your Taxes On Time

Running out of time to pay your taxes? You have a number of options - but not paying your taxes is not one of them. The old adage - "Pay me Now, or Pay me Later" is a very appropriate saying when it comes to paying taxes. You could end up paying a lot more in penalties plus interest. If you have already done some preliminary work and find that you owe tax but don't have the money to pay it all when you file, you have a number of options. Below are some tips that can help you lower the amount of interest and penalties when you don't pay the full amount to pay on time.

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April 9, 2013

Choosing the Right IRA

Setting aside money for your retirement is a smart thing to do - and tax time is a great time to get started. However choosing which Individual Retirement Account (or IRA), can sometimes be a difficult thing to do. The most popular types of retirement accounts are: Traditional, Roth, and SEP IRA. To qualify for an IRA contribution you must have earned income which is defined as: wages, salaries, tips, commissions, and bonuses but does not include income from dividends, pensions, or annuities. For those selecting a SEP IRA (Simplified Employee Pension IRA), earned income includes net income from self-employment. Below are a few thoughts to keep in mind when choosing your IRA:

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March 6, 2013

Identity Theft and Taxes

As you all know, identity theft is a serious problem and is something that the IRS has made a top priority especially now during tax season. Identity theft happens when your personal information is lost or stolen. Sometimes you won't even know that you were a victim of identity theft until after you file you tax return. In this case, when you actually file your own personal tax return, the IRS does not accept it and notifies you that a return was already filed using your name and social security number. Below are several things you can do to avoid becoming a victim of identity theft.

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February 12, 2013

Do You Need to File? If So, What Should You Do if You Don't Have Your W-2

It's that time of year again! Tax Time! And all of your questions are just beginning. For instance, who needs to file? What are the rules requiring that you file? If the answer is yes you do need to file, have you received your W-2 yet? If not, what can you do? Below are some answers so you can get started.

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February 5, 2013

Things To Keep In Mind When Filing Your 2012 Taxes

This year you have until Monday, April 15, 2013 to file your 2012 tax returns and pay any tax due. If you can not file in time you can request a 6-month extension. Keep in mind that this is an extension to file your return, not to pay any taxes due. If you believe you will owe money, you must complete the estimated payment section and submit your payment. Filing online is the easiest way to go. If you have a simple return you will find that major online tax preparers have a Free edition for Federal returns. Don't know which form you will need to complete? Here are a few IRS tips to guide you:

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September 4, 2012

How to Make Paying for College Less Stressful

Trying to figure out how to make paying for college expenses less painful? Whether you've just graduated from high school and going on to college or you're a returning college student, trying to stay on top of payment deadlines for tuition and other fees can be stressful. To ease that burden, take a look at these IRS tips about education tax benefits that can help offset some college costs for both students and parents.

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August 30, 2012

Tips to Increase Take Home Pay and Prevent Tax Bills

Now is a good time to adjust your 2012 tax withholding to avoid big tax refunds or tax bills when you file your tax return next year. You should act soon to adjust your tax withholding to bring the taxes you must pay closer to what you actually owe and put more money in your pocket right now. According to the Internal Revenue Service, IRS, millions of American workers have far more taxes withheld from their pay than is required. Then we anxiously wait for our tax refunds to make major purchases or to pay large bills. Wouldn't it be better to have more "take home" pay now? Here are some ideas on what to do to bring the taxes you pay during the year closer to what you will actually owe when you file your tax return.

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August 13, 2012

Organizing Your Tax Records

We're more than half way through 2012 so if you don't have your tax-related documents in order you will truly be stressed once tax time roles around. Although it's not a difficult task, it's oftentimes overlooked and ignored until the last minute. Here are a few tips for both Individual tax payers and Small Business Owners that will make your tax time filing easier:

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January 15, 2012

Preparing for the 2012 Tax Filing Season

The 2012 Tax Filing Season is here! Although your tax return isn't due until April 17th, you should start thinking about it now so you're not stressed out at the last minute. Did you notice the revised filing date of April 17th? According to the IRS, the reason for the date change this year is for two reasons: April 15 falls on a Sunday; and Emancipation Day (a holiday observed in the District of Columbia), falls on Monday, April 16. According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year. Although you may think it's early, the IRS will start accepting e-filed tax returns on Tuesday, January 17, 2012. Here a few key tips to keep in mind as you prepare to file your taxes:

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September 1, 2011

IRS Disaster Assistance and Emergency Relief for Individuals and Businesses

The Internal Revenue Service has disaster assistance and emergency relief available for those who have suffered as a result of Hurricane Irene. There are tax provisions that may help both individuals and businesses recover financially from the impact of disasters, such as Hurricane Irene, especially when the federal government declares their location to be a major disaster area.

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April 15, 2011

April 18 Tax Day

This year tax day falls on Monday, April 18th. As you work on getting those dreaded taxes done, keep the following IRS tax tips in mind - otherwise you may have a delay in getting your tax refund.

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March 31, 2011

Energy-Related Tax Credits Go Beyond 2011

The concept of Going Green will continue to help you save on your individual taxes through the year 2016. Tax credits created or expanded by the American Recovery and Reinvestment Act of 2009 includes the Residential Energy Efficient Property Credit. According to the Internal Revenue Service, "this tax credit will help individual taxpayers pay for qualified residential alternative energy equipment such as solar hot water heaters, solar electricity equipment and wind turbines installed on or in connection with their home located in the United States and geothermal heat pumps installed on or in connection with their main home located in the United States". The credit, which runs through 2016, is 30% of the cost of qualified property.

If you are looking for a personal loan to fund your energy-related project, visit theManagingMoney.com Loan Center.

March 16, 2011

Tax Filing Deadline Quickly Approaching

The 30 day deadline to file your 2010 taxes is just around the corner. Every year many taxpayers miss out on hundreds of dollars in potential credits and deductions because of rushing to complete their return before the April deadline. If you owe taxes, don't panic as there are options available to you including applying for an Installment Agreement or filing for a Tax Extension. In the case of an Installment Agreement you should still file your return by the April 18, 2010 deadline and pay as much as you can to avoid penalties and interest. With regard to a Tax Extension, you can get an automatic six-month extension of time to file through October 17, 2010. However, this extension of time to file your taxes does not give you more time to actually pay any taxes due. If you have not paid at least 90% of the total tax due by the April 18, 2010 deadline you may also be subject to an Estimated Tax Penalty.

Those taxpayers expecting a refund also have options of how to receive tax reimbursement including: refund in the form of savings bonds, payment to retirement accounts or mutual funds, or cash deposited directly to a checking or savings account. Beginning this year there are new savings bond options. Last year, if you chose to receive a savings bond as part of your refund, it could only be issued in the taxpayers' name. This year, you can designate anyone to receive a savings bond and also designate the co-owner or beneficiary.

Whether you are expecting a refund or owe taxes, let the ManagingMoney.com Tax Center help get you started. In this Tax Center we have tried to make this process easier for you by partnering with brand-name tax software companies including: TurboTax, H&R Block, and CompleteTax. You can start a new tax return, file for an extension, or download individual tax forms.

February 14, 2011

IRS Begins Processing Returns Delayed from AMT Legislation

In December 2010 the IRS announced that due to the recently enacted Alternative Minimum Tax (AMT) legislation there would be tax processing delays for taxpayers who itemize deductions, specifically those claiming the higher education tuition and fees deduction and the educator expenses deduction. Effective February 14, 2011 the IRS will begin accepting tax returns that were affected by this filing delay. The IRS stated that the delay was necessary to accommodate the December 17, 2010 enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 while not disrupting other operations tied to the filing season. The tax processing delay affected taxpayers using any of these five IRS forms: Form 8863, Education Credits; Form 5695, Residential Energy Credits; Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers; Form 8396, Mortgage Interest Credit; and Form 8859, District of Columbia First-Time Homebuyer Credit. To make sure you have the most up-to-date tax software, visit the ManagingMoney.com TaxCenter. Here you can compare the top tax providers in either download or desktop format.

September 28, 2010

Income Tax Strategies for Year End

As year-end rapidly approaches, it's a good time to take a look at your tax situation. You still have time to take action that could reduce your income tax liability for 2010. First, you need to assess where you currently stand on the following issues:

Continue reading "Income Tax Strategies for Year End" »

April 5, 2010

Investment Portfolio Losses

Capital gains on investments held for one year or less are short-term capital gains taxed at ordinary income tax rates. For investments held over one year, the maximum long-term capital gains tax rate in 2010 is 15% (0% for taxpayers in the 10% or 15% tax bracket). While the 15% rate is significantly below the maximum ordinary income tax rate of 35%, it still takes a significant chunk out of your investment portfolio.

Continue reading "Investment Portfolio Losses" »

August 15, 2009

Develop a Tax-Planning Mentality

Many people confuse tax planning with tax preparation and only think about the subject when preparing their annual tax return. However, there is little you can do to actually lower your bill when preparing your return. If your goal is to reduce income taxes, you need to be aware of tax-planning opportunities throughout the year.

Continue reading "Develop a Tax-Planning Mentality" »

August 6, 2009

Reduced Planning Opportunities for Vacation Homes

In the past, it was possible to turn a vacation home or rental home into your principal residence so that you could later sell it and exclude gains on the sale from income. If you were planning on such a strategy, be aware that the tax rules recently changed.

Continue reading "Reduced Planning Opportunities for Vacation Homes" »

June 23, 2009

Taxes and Your Investments

Ordinary income taxes on short-term capital gains and interest income can go as high as 35%, while long-term capital gains and qualified dividend income are taxed at rates not exceeding 15% (0% if you are in the 10% or 15% tax bracket). One way to help maintain your portfolio's growth potential is to invest in a tax-efficient manner. Below are seven suggestions you may want to consider:

Continue reading "Taxes and Your Investments" »

May 1, 2009

Rolling Over an IRA to a 401(k) Plan

If your 401(k) plan permits, you can roll over balances from a traditional individual retirement account (IRA), but not a Roth IRA, to a 401(k) plan. To qualify as a tax-free rollover, the balance must be rolled over to a 401(k) plan for the same person who owns the IRA, the balance must be rolled over within 60 days, and the maximum amount rolled over cannot exceed amounts that would be includible in gross income if not rolled over. Thus, contributions to nondeductible IRAs cannot be rolled over, but contributions to deductible IRAs and all earnings in both types of IRAs can be rolled over. Also, any required minimum distributions for the year cannot be rolled over.

Continue reading "Rolling Over an IRA to a 401(k) Plan" »

March 31, 2009

Tax Planning as You Age

While tax planning should be a consideration through all phases of life, the nature of that planning changes as you approach retirement age. During your working years, your primary tax-planning objectives are to reduce your current income taxes while saving for retirement. After decades of accumulating money, you now need to ensure you withdraw and manage that money properly. Here are five tips you should consider:

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March 20, 2009

Get to Know the Three Types of IRS Audits

The Internal Revenue Service (IRS) is not exactly the favorite government agency of many Americans. This can only be expected given that everyone thinks differently on how best to compute and pay their taxes. Nonetheless, you should have a working knowledge of the tax system to be prepared in case you get audited. It is reported that around 80% of American tax payers are subjected to an IRS audit at least once in their lifetime.

Continue reading "Get to Know the Three Types of IRS Audits" »

January 16, 2009

For the IRS, a Season of Kindness

The IRS is promising to be kinder in 2009. They say that agents will have more freedom to suspend collections in those cases where people who owe back taxes are unable to pay. That doesn't mean they won't have to pay eventually, just that the IRS won't keep harassing you if you don't have the ability to repay what you owe at the present time. The guidelines issued to agents include cases where the taxpayer is facing serious illness, relies solely on social security or welfare, or have lost their jobs.

Continue reading "For the IRS, a Season of Kindness" »

January 11, 2009

Gifting Considerations

Deciding whether you should give a significant asset to an heir during your life or after your death has typically involved weighing potential estate tax costs against capital gains taxes that would be due when the asset is sold.

Continue reading "Gifting Considerations" »

November 5, 2008

Tax Consequences of Outstanding Debt Exceeding Home Values

When the value of a home is less than the outstanding debt, the homeowner's options are dismal. Foreclosure, deeds in lieu of foreclosure, and short sales all result in the loss of the home with serious credit consequences for the homeowner. In addition, if the lender forgives part of the loan, the homeowner walks away with nothing, and there may still be the following tax consequences:

Continue reading "Tax Consequences of Outstanding Debt Exceeding Home Values" »

October 15, 2008

Year-End Tax Planning Strategies

As year-end rapidly approaches, it's a good time to take a look at your tax situation. You still have time to take action that could reduce your income tax liability for 2008. Once you have an idea of where you stand for 2008 with your income tax situation, you can evaluate some tax planning strategies that may reduce your income tax burden in 2008. Here are some tips to consider:

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October 6, 2008

Tax Consequences Between a Roth 40l(k) Plan and IRA versus Traditional Plans

Should you pay income taxes now, so you can withdraw funds after retirement tax free? Or are you better off delaying income taxes until after retirement? This is the basic decision when choosing between a traditional deductible individual retirement account (IRA) and a Roth IRA, or between a 401(k) plan and a Roth 401(k) plan. With the Roth options, you are paying taxes now so you can take qualified distributions income-tax free. With the traditional IRA and 401(k) plan, you are delaying taxes until distributions are taken.

Continue reading "Tax Consequences Between a Roth 40l(k) Plan and IRA versus Traditional Plans" »

May 14, 2008

Asset Transfers by Nonspouse Beneficiaries

The Pension Protection Act of 2006 contained a provision allowing nonspouse beneficiaries to roll over funds from an employer pension plan to an inherited individual retirement account (IRA), starting in 2007. This was viewed as a significant development for nonspouse beneficiaries, who would be able to extend distributions from employer pension plans over their life expectancies rather than the typical five-year period imposed by most plans.

Continue reading "Asset Transfers by Nonspouse Beneficiaries" »

May 7, 2008

Withdrawals From Your IRA

The tax laws regarding withdrawals from individual retirement accounts (IRAs) are complex. To avoid unnecessary penalties and to ensure you withdraw the funds efficiently, here are the basics:

Continue reading "Withdrawals From Your IRA" »

April 14, 2008

Taking Advantage of the 0% Capital Gains Tax

In 2008 to 2010, the capital gains tax rate for individuals in the 10% or 15% tax bracket will be 0% (down from 5% previously). After 2010, the rates will revert to pre-2001 rates, unless further legislation is passed. Who will benefit from this reduction?

Continue reading "Taking Advantage of the 0% Capital Gains Tax" »

January 16, 2008

Rapid Refund Income Tax Loans: Are They Worth the High Fees?

With tax season right around the corner, many income tax preparation companies are getting ready for the busy season of filing taxes to begin. Well known companies like Jackson Hewitt and H & R Block have been around for years, and compared to small, privately owned tax preparers, they are unique. One thing that makes these types of companies unique is the fact that they offer quicker ways for you to receive your money.

Continue reading "Rapid Refund Income Tax Loans: Are They Worth the High Fees?" »

October 8, 2007

"Kiddie Tax" Age Gets Raised

The Small Business and Work Opportunity Tax Act of 2007, signed into law on May 25, 2007, raised the age limit for application of the "kiddie tax" to all children under age 19 (previously age 18) and to students under age 24, effective for tax years beginning after May 25, 2007. Just last year, the "kiddie tax" age limit was raised from under age 14 to under age 18. There is an exception to these new age limits. If the earned income of an individual over age 17 exceeds half of his/her support, the "kiddie tax" does not apply. Scholarships are not considered a part of this test.

Continue reading ""Kiddie Tax" Age Gets Raised" »

September 14, 2007

Selling Your Home at a Loss

With the real estate market slowing, more taxpayers may find themselves in a situation where the sale of their home results in a tax loss or their net sale’s price is less than the amount of their outstanding mortgage.

Continue reading "Selling Your Home at a Loss" »

September 12, 2007

Undoing a Roth Conversion

When converting a traditional individual retirement account (IRA) to a Roth IRA, transferred amounts must be included in income if taxable when withdrawn (e.g., contributions and earnings in traditional IRAs and earnings in nondeductible IRAs), but are exempt from the 10% federal income tax penalty. Your adjusted gross income (AGI) cannot exceed $100,000 in the conversion year, excluding any converted amounts.

Continue reading "Undoing a Roth Conversion" »

September 10, 2007

Figuring Out Your Real Marginal Tax Rate

If you answer that question by looking at the tax rate tables that show income tax rates of 10%, 15%, 25%, 28%, 33%, and 35%, you could be understating your real marginal tax rate. Your marginal tax rate could be higher due to numerous provisions that phase out or limit certain deductions, credits, and other tax benefits. Some of the more significant provisions include:

Continue reading "Figuring Out Your Real Marginal Tax Rate" »

September 7, 2007

Tax Planning for Major Life Events

Most of life’s major financial decisions have tax ramifications. Major life events such as marriage or divorce, the birth or adoption of a child, the purchase or sale of a home, and retirement all have tax ramifications. Keep the following tax-planning tips in mind as you encounter those events:

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September 3, 2007

Moving Tax Deduction: How Do I Qualify?

Tax laws and regulations are as easy to decipher and understand as a foreign language. When trying to evaluate whether your moving expenses are deductible on your income tax return there are a few tests you will need to pass.

Continue reading "Moving Tax Deduction: How Do I Qualify?" »

August 13, 2007

Investing in a Tax-Efficient Manner

During periods of uncertain returns, it becomes even more important to consider other ways to increase your portfolio’s value. One of those strategies is to invest in a tax-efficient manner.

Continue reading "Investing in a Tax-Efficient Manner" »

July 9, 2007

Benefits of Section 529 Plans

While section 529 plans always had significant tax benefits, there was concern because many of those benefits were scheduled to expire after 2010. However, the Pension Protection Act of 2006 made many section 529 plan provisions permanent. Thus, if you are looking for a way to fund your child’s college education, you should definitely take a look at section 529 plans. Consider these basic facts about section 529 plans:

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July 5, 2007

Rollovers for Nonspouse Beneficiaries

The Pension Protection Act of 2006 contained a provision allowing nonspouse beneficiaries to roll over funds from an employer pension plan to an inherited individual retirement account (IRA), starting in 2007. This was viewed as a significant development for nonspouse beneficiaries, since they would be able to extend distributions from employer pension plans over a longer period. However, recent guidance by the Internal Revenue Service (IRS) indicates that this provision may be difficult for nonspouse beneficiaries to implement.

Continue reading "Rollovers for Nonspouse Beneficiaries" »

July 3, 2007

Planning for 2010 Roth Conversions

Starting in 2010, all taxpayers, regardless of the amount of their adjusted gross income (AGI), can convert a traditional individual retirement account (IRA) to a Roth IRA. Before 2010, your AGI cannot exceed $100,000 to convert, not including any income resulting from the conversion. Amounts converted must be included in income if taxable when withdrawn (i.e., contributions and earnings in deductible IRAs and earnings in nondeductible IRAs), but are exempt from the 10% early withdrawal penalty.

Continue reading "Planning for 2010 Roth Conversions" »

January 7, 2007

2007 Tax Favored Savings Plan Updated Limits Summary

Are you confused about plan limits? This quick reference for 2007 should make your savings planning a little simpler.

If you do not know which plans may be best for your business structure, or what plans you are eligible to use, consult with a qualified advisor for assistance. They will also be able to do a comparison of your individual options.

Remember the maximum allowable compensation that can be used to determine plan contributions in 2007 is $225,000. For highly compensated employees, the ceiling is a much lower $100,000.

Continue reading "2007 Tax Favored Savings Plan Updated Limits Summary" »

November 14, 2006

Who Is Affected by the Alternative Minimum Tax

The alternative minimum tax (AMT) was originally designed to ensure wealthy taxpayers paid at least a minimum amount of tax. However, due to the tax calculation, more and more taxpayers are becoming subject to the AMT. For instance, 3.6 million taxpayers paid the AMT with their 2005 tax returns, with that number projected to increase to 30 million, or 20% of all taxpayers, by 2010.

Continue reading "Who Is Affected by the Alternative Minimum Tax" »

October 4, 2006

Tax Planning Strategies

While many strategies can help you reduce your income tax bill, those strategies basically fall into three main techniques: reduce or eliminate taxes; postpone the payment of taxes until sometime in the future; and shift the tax burden to another individual.

Continue reading "Tax Planning Strategies" »

August 9, 2006

Considering Your (Stock) Options

To attract and keep top employees, more companies are offering them employee stock options. If you receive employee stock options as part of your compensation package, careful planning can help you make the most of them.

Continue reading "Considering Your (Stock) Options" »

June 8, 2006

Utilizing Losses in Your Portfolio

Capital gains on investments held for one year or less are short-term capital gains taxed at ordinary income tax rates. For investments held over one year, the maximum long-term capital gains tax rate is 15% (5% for taxpayers in the 10% or 15% tax bracket). While this is significantly below the maximum ordinary income tax rate of 35%, it still can take a significant chunk out of your investment portfolio.

Continue reading "Utilizing Losses in Your Portfolio" »

March 14, 2006

Deciding Where to Hold Investments

How earnings are taxed on investments depends on whether the investments are held in a taxable or tax-deferred retirement account.

Continue reading "Deciding Where to Hold Investments" »

January 25, 2006

Basic Facts about Taxes

The subject of income taxes is one that most people would prefer to ignore. However, since income taxes are a significant expense for most taxpayers, you should come to grips with some basics about taxes:

Continue reading "Basic Facts about Taxes" »

December 14, 2005

Tax Strategies and Caring for Elderly Parents

As life expectancies continue to increase, it becomes increasingly likely that you may need to financially help an aging parent. If you find yourself in that situation, review the tax laws to determine whether you can obtain some tax relief.

Continue reading "Tax Strategies and Caring for Elderly Parents" »

September 12, 2005

10 Tax Strategies to Consider

If you’re looking for ways to reduce your income tax bill, you may want to consider the following tax-saving strategies:

Continue reading "10 Tax Strategies to Consider" »

July 12, 2005

Consider an IRA Conversion

With tax planning, the goal typically is to delay the payment of income taxes. Thus, it can be difficult to understand why it might make sense to convert a traditional Individual Retirement Account (IRA) to a Roth IRA, which results in the current payment of income taxes.

Continue reading "Consider an IRA Conversion" »

June 14, 2005

Taxes and Investing Strategies

One of your portfolio’s largest expenses is probably taxes. Ordinary income taxes on short-term capital gains and interest income can go as high as 35%, while long-term capital gains and dividend income are taxed at rates not exceeding 15% (5% if you are in the 10% or 15% tax bracket). One way to help keep your portfolio growing is to invest in a tax-efficient manner. Some suggestions include:

Continue reading "Taxes and Investing Strategies" »

January 30, 2005

Withdrawing Retirement Account Funds

After retirement, you’re likely to find that your retirement savings include several different vehicles, which might include: 401(k) plans, Individual Retirement Accounts (IRAs), profit-sharing plans, and taxable investments designated for retirement. When withdrawing funds, you need to decide the order in which to tap those accounts. Withdrawing your funds in the most tax-efficient manner can add years to their life, thus increasing your lifetime withdrawals. Typically, you’ll want to consider this strategy:

Continue reading "Withdrawing Retirement Account Funds" »

December 11, 2004

Getting Ready for Income Tax Time

Although it might seem a bit early to start thinking about your 2004 tax return, much tax-related information arrives in January. Organizing this information as it comes in makes the tax preparation process easier. While organizing your tax records is not an exciting task, it's not an insurmountable one either. Follow these tips:

Continue reading "Getting Ready for Income Tax Time" »

October 12, 2004

Review Income Tax Planning Strategies

With marginal tax rates of up to 35%, income taxes can have a significant effect on your financial situation. There are basically three strategies to help reduce your income tax bill:

Continue reading "Review Income Tax Planning Strategies" »

June 1, 2004

Withdrawing Your IRA Funds

The tax laws regarding withdrawals from individual retirement accounts (IRAs) are complex. To avoid unnecessary penalties and to ensure you withdraw the funds efficiently, let's review the basics:

Continue reading "Withdrawing Your IRA Funds" »

July 1, 2003

Recharacterizing Your Roth Conversion

The steep market declines of the past three years have made converting from a traditional Individual Retirement Account (IRA) to a Roth IRA more attractive. When you convert, transferred amounts must be included in income if taxable when withdrawn (e.g., contributions and earnings in traditional IRAs and earnings in nondeductible IRAs), but are exempt from the 10% federal income tax penalty. Once the IRA is converted to a Roth IRA, qualified distributions may be taken on a tax-free basis. Thus, converting while values are low allows you to pay a lower tax bill and then withdraw the funds tax free in the future, hopefully after the values have recovered.

Continue reading "Recharacterizing Your Roth Conversion" »

Another Look at IRA Accounts

You have three choices for Individual Retirement Accounts (IRAs), each with different eligibility requirements and tax laws. In addition, the maximum annual contribution is changing. All this complexity makes it difficult to decide which IRA to select. To help you with that decision, first review the rules for each.

Continue reading "Another Look at IRA Accounts" »

June 1, 2003

Avoid Borrowing From Your 40l(k) Plan

Your 401(k) plan is such a tempting place to borrow money from. There are no credit checks or lengthy applications to fill out. You typically receive the loan proceeds in a couple of weeks. Loan proceeds can equal up to the lesser of 50% of your vested interest in the plan or $50,000. The loan can be repaid over five years, longer if it is used to purchase a primary residence. The interest rate is reasonable, typically one or two percentage points over the prime rate.

Continue reading "Avoid Borrowing From Your 40l(k) Plan" »

February 1, 2003

Look Out for These Tax Mistakes

If your objective is to pay the least amount of income taxes, then you need to be aware of these common tax mistakes:

Continue reading "Look Out for These Tax Mistakes" »

 

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