Changes to the Child Tax Credit for 2014

If you’re like me, you like to get every tax credit that you can.

Why not, right?

It’s like buying something that you know you are going to have to buy, and having a coupon for it.

It would be silly not to use it.

IMG - Changes to the child tax credit

The only problem with tax credits is that it’s hard to keep track of them all. One such credit is the Child Tax Credit. Here are the rules behind the tax credit of 2014; see if you qualify.

Who Can Claim the Child Tax Credit?

Families who earn under $130,000 a year and have one or more dependent children under the age of 17 may take advantage of the Child Care Tax Credit on their tax return.

Do You Qualify for this Credit?

There are, of course, several further conditions that must be examined in order to be certain that you qualify for all or some of the Child Tax Credit. They are as follows: [Read more...]

When Are Your 2013 Taxes Due? Tax Filing Deadline in 2014

When are taxes due 2012If you are like 40% of the population, you will file your tax return as soon as you possibly can in order to

A) get it over with and/or
B) receive your refund more quickly.

More than thirty-eight million taxpayers in the United States file by the end of February.

However, if you are one of those lifelong procrastinators who always waits until the last minute… This is not your year!

When are taxes due for 2014? Like last year, Tax Day falls on the usual 15th day of April, so this year your 2013 tax return is due Tuesday, April 15th, 2014.

In previous years (and to come in future years) you can sometimes get a few days extension due to a combination of interesting circumstances. In the United States, the tax deadline can never fall on a Saturday or Sunday. If April 15th lands on a weekend, taxes will not be due until the following Monday. Tax Day can also not be on a federal holiday.

[Read more...]

How to Stop Wage Garnishment

how to stop irs wage garnishmentIf you owe money to the IRS due to back taxes or unfiled tax returns, one of the ways that Uncle Sam can get his due is by garnishing your wages.

However, it doesn’t have to end in this step.

In fact, wage garnishment is something of a “last resort” before you find yourself faced with the possibility of going to jail. If you want to stop IRS wage garnishment, you can plan ahead.

The IRS will send you letters months prior to garnishing your wages, so you can’t say you weren’t warned. And you can even put a stop to IRS wage garnishment before you get to the letter stage if you take the time to address the problem now.
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Planning a Short Sale? Why You Need to Consider Completing the Transaction Before the End of the Year

short saleAn increasing number of homeowners are turning to short sales in order to unload their homes without going through a foreclosure.

If you decide that a short sale is right for your situation, it’s important to understand that you will need to complete the transaction before the end of the year if you want to avoid running into tax problems that can weigh on your finances.

What is a Short Sale?

A short sale is a real estate transaction in which the mortgage lender agrees to accept less than you owe on the home in the name of selling the house. If you owe $200,000 on your mortgage, but home values have dropped in your neighborhood so that you can only get $180,000 for the home, a lender might be willing to allow you to sell the home “short” of what you owe. Short sales also come into play when you are having problems staying current with your mortgage payments.

A short sale can help you avoid a foreclosure. This means less hassle for the lender in many cases, and the lender might get more with your short sale than with an attempt to sell a real estate owned property.

You are forgiven the difference between what you owe and what the home sells for. In this instance, you are forgiven $20,000.

“Wait… this sounds too good to be true!”

There are a few other things you need to know about the short sale process, especially for this year: [Read more...]

Changes to the Child Tax Credit for 2013

child tax creditIf you’re like me, you like to get every tax credit that you can. Why not, right? It’s like buying something that you know you are going to have to buy and having a coupon for it. It would be silly not to use it.

The only problem with tax credits is that it’s hard to keep track of them all. One such credit is the Child Tax Credit. Here are the rules behind the tax credit of 2013 to see if you qualify.

Who Can Claim the Child Tax Credit?

Families who earn under $130,000 a year and have one or more dependent children under the age of 17 may take advantage of the Child Care Tax Credit on their tax return.

Do You Qualify for this Credit?

There are, of course, several further conditions that must be examined in order to be certain that you qualify for all or some of the Child Tax Credit. They are as follows: [Read more...]

Are Roth IRA Contributions Tax Deductible?

Are Roth IRA contributions tax deductible?

The simple answer is no. But a more nuanced answer will note that although Roth IRA contributions themselves are not tax deductible, you can claim a Roth IRA tax credit or a claim a loss on a Roth IRA if eligible.

So let’s take a look at the various options at your disposal.

Non-Deductible Roth IRA Contributions

Unlike 401k or Traditional IRA contributions, Roth IRA contributions are not tax deductible. According to the Roth IRA funding rules established by the IRS, all your contributions must be made with after-tax dollars.

For example, let’s say you earn $40,000, and you’re in the 25% tax bracket. If you want to make a $5,500 tax deductible 401k contribution, you’ll put $5,500 in your 401k first and then you pay your taxes, which leaves you with $25,875 (75% of $34,500).

However, if you make a $5,500 non-deductible Roth IRA contribution, you’ll pay your taxes first, which leaves you with $30,000 (75% of $40,000). Then you’ll make your $5,500 Roth IRA contribution, leaving you with $24,500 in disposable income.
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Be Smart with Your Tax Refund: Save, Invest, Pay Down Debt

what to do with tax refundNow that tax season is over, you might be expecting a refund.

When you get that tax refund, what will you do with it?

It’s important to carefully consider your options, and then make a choice that will benefit you in the long run.

This is especially true if you end up with a big tax refund.

What are Your Options with a Tax Refund?

It’s true that many people see a tax refund as a windfall (even though, for some, it’s just getting their own money back after lending to the government interest-free). Since it’s viewed as windfall money, many consumers decide to spend it. A tax refund can pay for a vacation, a new TV set, or any number of other things.
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How to File Taxes with Your 1099′s

Tax time is coming!  Now is the time of the year when you start getting all your tax documents in order and either start calling your accountant or fire up Turbo Tax to get it done before the deadline.   One of the most common tax documents that everyone receives is the 1099.  Most everyone has heard of or receives a 1099, but; did you know that there are 13 different types of them?  Here’s a brief rundown of the different types of 1099′s and which one(s) may apply to you.

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5 Tests To Claim a Dependent On Your Tax Return

claiming-dependents-on-tax-return

Ever been in a situation where you’ve had somebody staying with you for an extended period of time?

Maybe it was the relative that was going to stay with you for a “brief period of time” until they “got back on their feet”.

Heard that one before?

Or maybe you’ve had to have a parent move in with you where you’ve had to take care of them.

If you find yourself in a similar situation, you might be wondering what tax deductions are in store for you.

To be able to claim a dependent on your return (and don’t forget to file by the tax deadline), there are 5 tests that you have to pass in the eyes of the IRS.   Here they are:

1.  Support Test.

The tax payer must provide more than half the support of the claimed dependent, except for special rules with respect to multiple-support agreement and children of divorced or separated parents.  Support includes:  food, lodging, clothing, education, medical and dental care, recreation, transportation and other necessities. [Read more...]

When Are Your 2012 Taxes Due? Tax Filing Deadline in 2013

When are taxes due 2012If you are like 40% of the population, you will file your tax return as soon as you possibly can in order to

A) get it over with and/or
B) receive your refund more quickly.

More than thirty-eight million taxpayers in the United States file by the end of February.

However, if you are one of those lifelong procrastinators who always waits until the last minute… This is not your year!

When are taxes due for 2012? Unlike last year, Tax Day falls on the usual 15th day of April, so this year your 2012 tax return is due Monday, April 15th, 2013.

In previous years (and to come in future years) you can sometimes get a few days extension due to a combination of interesting circumstances. In the United States, the tax deadline can never fall on a Saturday or Sunday. If April 15th lands on a weekend, taxes will not be due until the following Monday. Tax Day can also not be on a federal holiday.


[Read more...]

Do I Have to File A Tax Return?

have to file tax returnDo you ever wonder if you really have to file a tax return

When I was younger, I always assumed that since I barely made anything, that it didn’t make sense for me to file.

Filing taxes and whether or not you need to actually do so can be confusing. But if you follow a few simple guidelines, you can more easily understand where you are at in this. Not all people do need to file.

If you have a moderate to low income, for example, you may not have to.  For those that get overwhelmed when filing taxes, this can be a plus.
[Read more...]

What Happens If You Don’t File Your Tax Return?

The old saying goes there are only two certainties in life: Death and Taxes.

We know we can’t cheat death, but did you ever wonder what happens if you file your tax return late? Or even worse,  you don’t file your tax return at all?

Frankly, I’m too scared to find out what would happen if I didn’t file my taxes .

Just in case you ever flirted with the idea, here’s the penalties you face from the IRS.

What happens if you file your taxes late

If you already missed the boat,  here are some options if you missed the tax deadline.

Warning: You don’t want to mess with the IRS.  Depending on the nature of the actual return, you are either faced with paying interest or even worse, penalties. Consider, at least, filing a tax extension.

When Are Taxes Due in 2014?

Update: The tax filing date for 2014 is April 15th. Since April 15th falls on a Tuesday and there is no government holiday (unlike past years), that is the day your taxes are due.

Interest When You File Tax Return Late

Interest on underpayments or over-payments runs from the extended due date of the tax return, i.e. April 15th of any given year.  Regular interest is set by statute, but underpayment incurs a 1% premium rate, compared with the rate of interest that will be paid by the IRS on over-payments or refunds.

Basically, expect to be paying more interest in you owe money to the IRS, versus if you paid too much.  If you are owed a refund, you’ll still earn interest on the amount entitled to you, just at a lower interest rate.  It’s kind of like getting a loan from a bank versus how much they pay in their savings accounts. [Read more...]