Friday, February 25, 2011

Collecting Social Security While Continuing To Work - What Are The Rules?

"Isn't there an age that I don't have to worry about it anymore ... when I can work as much as I want without losing my social security?  In fact, I thought at age 65 I didn't have to pay tax on it anymore either!

I have been asked these questions enough times that I realize there are many misconceptions about them.  Please continue reading to get some of the answers ...

Wednesday, February 23, 2011

How To Increase Your Take-Home Pay By Asking Your Boss For A Pay Cut

If you work at a job where you have out of pocket expenses, this article is for you.  This could include driving your personal car to visit customers (or prospects, vendors, etc.), paying for your company uniform by payroll deduction, using some of your own tools or supplies on the job -- just to give a few examples.

Please read on to see how much both you and your employer could save on taxes by agreeing to work for less pay in exchange for having your employer pay for these items.

Monday, February 21, 2011

Don't Miss The Beautiful "Ugly Trailor"!

I'd like to share a blog post with you that I read and enjoyed from CraftoManiac about my friends at Ugly Trailor Antiques (click here to read it:  The Ugly Trailor is a very distinctive store owned and operated by Fred and Sue Thomas.  Their love of art and all things nostalgic is evident as you walk through their store.  It's located a few blocks up State Street from my office in Hurricane, Utah, which makes it very convenient for me when I want to find just the right unique gift -- which has already happened more than once!  If you're headed to Zion National Park it's convenient for you too, as you can't miss their trademark Ugly Trailor (pictured here) in the parking lot as you are driving there on Utah state highway 9.

If you take a moment to read on, I'll share some nice pictures of typical items you can find there and also what you can learn about business success from this store. 

Friday, February 18, 2011

Our Federal Budget: How It Impacts You (In Plain English)

You've heard that our President has submitted his budget proposal for the coming year.  $3,728,686,000,000.  That number is so big, who could comprehend it? Try this: Your share is $11,892. Get enough money out of one of your board games to represent your yearly gross income and put it on a table.  Then divide it into two stacks:  (1) Your share (or your family's -- multiply $11,892 by your family size) of federal government spending and (2) what's left.  Your job with each stack: 

Wednesday, February 16, 2011

You Wouldn't Leave Dollar Coins On The Ground ... Why Do It On Your Tax Return?

Chances are you do little things here and there for charitable causes that you forget about.  It's one of the few tax deductions that isn't limited by income or AMT.  Here's an easy way to make sure you don't forget some of what you're entitled to claim ...

Monday, February 14, 2011

Early Withdrawals From Your IRA/401k - Might As Well Gift Wrap It And Give it to IRS

Here's another huge tax misconception:  When you take money out of your IRA or 401(k) before age 59 1/2, you think the 20% they withhold from taxes right off the top hurts, but at least that's all it will cost.  Wrong!  Too often someone withdraws $40,000 so they will have $32,000 left after taxes to "save their house" only to find they owe another $8,000 when they file their tax return!  Why is that and what can you do about it?

Friday, February 11, 2011

No Child Tax Credit For 17 Year Olds? What's The Deal?

If you're confused because you thought you could claim your child as a dependent later than age 16, you're not alone.  This is definitely a common tax misconception.  You CAN still claim your child as a dependent after their 17th birthday ... but the child tax credit is something separate from the child dependency exemption.  In many cases you can qualify for both of these programs!

Wednesday, February 9, 2011

Gambling: Since I Lost More Than I Won, Why Is The IRS Dunning Me?

I believe the fastest way to get a "love letter" from the IRS is to ignore your gambling "winnings" when you file your tax return.  I know what you're thinking.  It's either "they already withheld taxes at the casino, so that took care of it" or "I lost more than I won, so that means I don't have to report it".  Wrong and wrong.

The saddest example of this that I've seen was a fellow who came in my office one day to see if he needed to file a tax return.  He was single, 72 years old, and living on a $800 monthly pension and his social security.  I asked him all the usual questions, and all I could get out of him was a statement from his bank showing he had earned $0.37 in interest on his savings account for the year.  He specifically said he had no gambling winnings.  So I told him his pension was below the limit for needing to file a tax return, and at his income level his social security wasn't taxable.

Several months passed before I saw him again, this time red faced, beyond angry, and clutching an IRS letter saying he owed them over $3,100 because he didn't file his tax return.  Of course, I was guilty until proven innocent.

Monday, February 7, 2011

Am I Better Off With A Big Tax Refund ... Or More Money In Each Paycheck?

No question about it - take the money in each paycheck!  I can't tell you how many people have told me they purposely have too much tax withheld from each paycheck, because it's the only way they can save.  So they pay banks $200-$400, or more, each year so they can save with Uncle Sam at zero interest.  These same people then either tell me they can't afford to pay down their credit card balances, or can't afford to save up for an emergency fund so they wouldn't need to use their credit cards so often.

This blog post continues to tell you how easy it is to put this extra $200-$400 (plus your tax refund itself) back in your pocket throughout the year!

Friday, February 4, 2011

Vehicle Expense - Should I Take Depreciation and Actual Costs ... or Mileage?

Answer ... it depends!  What are you using the vehicle for?  How many miles are you driving for a tax deductible purpose each year?  How much will your miles driven vary from one year to the next?  How many years do you plan to keep the vehicle? What is the time value of money to you ... specifically how much more valuable is a tax deduction today than a tax deduction 1, 2, or maybe more years in the future?

Your tax software will give you an answer for this year.  If that answer will also work best for you for the remaining years you use the car, you're in good shape.  Otherwise, you will want to visit with your tax pro... one that you have picked that will take the time to explore each of these options with you.  Be sure to remember that whether you choose to take claim depreciation and actual operating costs, or you choose to use the IRS mileage rate, you are required to continue using that choice for as long as you own and operate that vehicle.

Thursday, February 3, 2011

Higher Education Expenses and Your Taxes - Which Choice is Best for Me?

Exciting New Build by Caryl Sumner,
picturing Walsall College (U.K.)

If you, your spouse, or your qualifying child attend an eligible post-secondary school, you could be eligible for up to $2,500 per student in tax savings this year.  There are three main options, with complex questionnaires to determine what you qualify for.  Your tax software will guide you through these questions and generally will pick the best option -- but you need a human to see if state tax makes a difference.

The options for 2010 tax returns are the American Opportunity Tax Credit, the Lifetime Learning Credit, and the Tuition and Fees Deduction.  We'll discuss each of them, and also give an example of how state tax can change which choice will save you the most money.