Jill Russo Foster

Tips for Successful Personal Finances

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Is That Charity Worth of Your Donation?

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This year has been challenging, with wildfires, hurricanes and flooding. We all want to help and these people need our help. but you want to give your money where it will do the best and not go to scammers. If you choose to give, and I’m sure you do, make sure your money goes to those in need (not to scammers) through a charity that you have researched.

This is also the time of year when you are receiving mail / calls from many charities who are asking for donations in this holiday season.  Check them out before you make the decision to give.

Fundraisers can legally keep most of the money donated to the cause. Not to mention the scammers who are out there to take your money. Before you donate, find out whether the charity is legitimate and what percentage of donation actually go to the cause.

You can start your research at Give or Charity Navigator. These organizations research charitable organizations to find out how they use the funds they receive – how much actually goes to the cause versus other expenses.

Here are some tips to help in your research:

  • Find out if the charitable organization has a 501(c) status (IRS code for non-profit organizations).  Non-profits have stricter requirements, and your donation may be deductible on your tax return.
  • Find about how much of each dollar is being used for the cause versus administration costs and other expenses. The more expenses, the less of each dollar is being used for the cause. Look for the lowest administrative costs.
  • For cash donations, request a receipt to use as documentation on your tax returns. All donations over $500 will require additional documentation, so speak with your tax preparer ahead of time.
  • When donating non-cash items such as food, clothing, furniture, automobiles etc, you will need an itemized list of the items you donated and the total value. Most charities will ask you to value your own items.
  • Check with your tax preparer for specific details for your situation and make sure you get a receipt for your donations with the charity’s information on it.

Do your research and chose the organization(s) wisely.  This is a great way to help out others who are less fortunate than you during this season of giving.

It is tax time.  Are you ready?

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Here are a few things you need to know:

2021 IRS tax deadlines:

January                                15 Final estimated tax payment due for 2020

15 IRS Free File service opens

19 IRS Free File for military families opens

February                               12 IRS begins to process 2020 tax returns

April                                       15 Deadline to file your 2020 taxes

15 First estimated tax payment due for 2021

June                                       15 Second estimated tax payment due for 2021

September                            15 Third estimated tax payment due for 2021

October                                 15 IRS deadline for extended 2020 tax returns

You may be able to get your taxes prepared for free AND from a reputable source.

There’s help if you’re a senior or have a low to moderate income.

Go to www.IRS.gov to find information on the VITA program (Volunteer Income Tax Assistance), the TCE Program and AARP Tax-Aide.

There you can learn

  • If you qualify for the program
  • What to do bring to the meeting
  • Locations near you

You don’t have to be afraid to use these services. The tax preparers at these programs are certified volunteers who work under a qualified supervisor.  The location near me is at the local community college and is supervised by a CPA and Chair of the Accounting Department.

Each location will have different hours, so check before you make the trip. Some will take appointments and some are walk-in only.

If you qualify, you may save yourself a few hundred dollars. You’ll get the work done at no cost to yourself and a trained preparer can catch details that might net you a bigger return.

 

Stimulus Checks

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Did you receive your stimulus check?  If you do (or did) receive a stimulus check, are you wondering if you must pay the IRS taxes on it?  Is it considered reportable

income?

Here is a great article that will answer your questions.

As with all tax questions, please check with your tax preparer for your individual situation,

Decluttering Your Financial Records

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Since we have all been at home for months and doing things around the home, I thought I would rerun this appropriate newsletter about what you need to keep and toss for your financial records.

Here is what you can get rid of:

Paystubs – Do you have a stack of them?  You can get rid of last year’s because you have a W-2 that summarizes what you’ve earned.  Keep the W-2.  Make sure they match before shredding.

Bank Statements – If your bank gives you an annual summary or statement, then you can get rid of all the monthly or quarterly statements, but keep the annual summary / statement.

Tax Returns – Generally, you can get rid of tax returns that are seven years old or more (2013 and older) along with the supporting documentation.  However, you will want to check with your tax preparer if you:

  • bought, sold, and/or own a home
  • hold certain investments
  • received certain gifts
  • have any other special circumstance that requires you to keep related paperwork indefinitely.

In other words, check with your tax preparer before shredding your returns.

An alternative to paper files

Keeping your records on your computer is a great alternative to paper files. We had a lot of paper clutter hanging around, so I started the process of scanning my records as pdfs.  If you need a piece of documentation, it’s much easier to locate and open a single pdf than it is to search through a big, cluttered file full of paper. The best part is, that you don’t have to refile the pdf after you’re done looking at it. It’s also easier to fax or email a pdf if needed. Think of all the times you’ve needed to share information about insurances, taxes or rebates. Computer files are great to work with.  Remember to keep a back up of your files.  You wouldn’t want to lose them if your computer crashes.

Make sure to shred

Remember when I say “get rid of”, I mean for you to shred each and every document that has your personal information on it before throwing it away.  You don’t want to offer dumpster divers an opportunity to steal your identity.

Call your tax preparer to see what you need to keep and start to go through your paperwork to eliminate what you don’t need.  Happy Shredding!

Getting Your Taxes Done For Free

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Yes, it’s that time of year again – tax time!

You may be able to get your taxes prepared for free AND from a reputable source.

There’s help if you’re a senior or have a low to moderate income.

Go to www.IRS.gov to find information on the VITA program (Volunteer Income Tax Assistance), the TCE Program and AARP Tax-Aide.

There you can learn

  • If you qualify for the program
  • What to do bring to the meeting
  • Locations near you

You don’t have to be afraid to use these services. The tax preparers at these programs are certified volunteers who work under a qualified supervisor.  The location near me is at the local community college and is supervised by a CPA and Chair of the Accounting Department.

Each location will have different hours, so check before you make the trip. Some will take appointments and some are walk-in only.

If you qualify, you may save yourself a few hundred dollars. You’ll get the work done at no cost to yourself and a trained preparer can catch details that might net you a bigger return.

Required Distributions Are Changing – Make Your Plan

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As we get older and start to think about reducing our working hours or retiring all together, it’s time to make a plan for your finances before you take the leap.  If you have been contributing to an Individual Retirement Account (IRA), 401K or other pre-tax account, you’ll need to start taking money out of your accounts. 

You might be thinking, I don’t want to take the money out until I need it.  Well, the government sees it differently.  They want there tax money since you have deferred the taxes.  Remember, this becomes taxable money and may put you in a higher tax bracket. As always you’ll need to discuss this with your tax preparer, bank / investment professional and/or attorney for what is right for you and your situation.

The old rule, is in the year after you turn 70 1/2 you were required to take a minimum distribution from your account by April 1 of the following year for the first year (then Dec 31 for year 2 subsequent years).  This rules is still true for people who turned 70 1/2 years old by the end of 2019.  Keep in mind that you can take as much as you want, but you have to take a minimum distribution each and every year after.

The new rule is part of the SECURE  (Setting Every Community Up for Retirement Enhancement) Act, passed in 2019.  Now, if you are younger than 70 1/2 by Dec 31, 2019, you can now wait until you are 72 years old before having to take the minimum distribution from your tax deferred account(s).  So you can let your money grow an additional two years.

Now, to avoid penalties with your required minimum distribution, you must take out a minimum each and every year.  To determine your amount, start with the value of your account on Dec 31 of the prior year and divide that by your life expectancy to come up with your amount.  If you take less than your are required, the penalties are ridiculously high.  They can be as much as 50%.  You have worked very hard for your money and you wouldn’t want to give it up to penalties.

Make a plan that’s right for you with your professionals, so that you get the money you need within the guidelines for the distribution.  Make sure to take at least what your are entitled.  You’ll have to pay the taxes on the distribution, but you don’t want to pay additional penalties to the government.  With this planning step, you can decide if you can afford to fully retire or if you need to keep working.

Tax Time Is Here

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Yes, it’s that time of year again – tax time.  As of January 27, you be able to file.

You can get your taxes prepared. 

You don’t want to wait until the last minute then realize you can’t find the all important paperwork to back up your tax return.

You may be able to get your taxes prepared for free AND from a reputable source.

There’s help if you’re a senior or have a low to moderate income.

Go to www.IRS.gov to find information on the VITA program (Volunteer Income Tax Assistance), the TCE Program and AARP Tax-Aide.

There you can learn

  • If you qualify for the program
  • What to do bring to the meeting
  • Locations near you

You don’t have to be afraid to use these services. The tax preparers at these programs are certified volunteers who work under a qualified supervisor.  The location near me is at the local community college and is supervised by a CPA and Chair of the Accounting Department.

Each location will have different hours, so check before you make the trip. Some will take appointments and some are walk-in only.

If you qualify, you may save yourself a few hundred dollars. You’ll get the work done at no cost to yourself and a trained preparer can catch details that might net you a bigger return.

Our January Rituals

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It’s that time of year that we evaluate many things in our lives:

January is a month that we analyze our bills, We review all bills and if necessary, we take action.  It could be as simple as comparison shopping, reviewing overages and more.  One thing we have done was to review our homeowners insurance and make some changes.   We replaced our home’s roof last fall, that qualified us for a credit on our homeowner’s insurance.  We made some other small changes.  All that resulted in a $500 premium savings.

As we reviewed finances, we made a decision to close some accounts that were no longer used, cancelled memberships / subscriptions that we didn’t use.  We transferred some debt to a zero percentage interest rate credit card.  If you do this make sure you payoff the balance before the zero percentage expires.  We have taken the balance and divided it by the number of months.  We make that payment or more each and every month.  We updated our phone and mail preferences so that we receive less unwanted mail and phone calls.  For links to these companies visit my resources page.

While we are preparing for our taxes, we are reviewing paperwork.  That means filing, scanning and shredding.  Be sure to check with your tax preparer about what documents should be saved and for how long.

At this time of year, we update all passwords.  You never want to use the same password for your accounts – accounts should have there own unique user id and password.  Yes, it can be a pain to remember.  But if someone get access to one of your accounts, you don’t want to give them access to everything.

What do you do annually in January?

Tax Day Is Here!

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Yes, today is April 15! With that it’s tax day for us here is the US. 

If you haven’t already today is the day to pay your taxes.  We file early ever year, but always wait to pay or taxes until today.

Filing early is one of the steps to help eliminate tax scams.  You don’t want someone filing your taxes before you do!  So we file early.  On the other side, I don’t want to give my money to the government ahead of time.  I want it to earn interest until the last possible day.  So when we file, our ta preparer has the state or federal government automatically take the payment on April 15.  I want to hold on to our money, but I don’t want to be late either.

Getting a refund means you are loaning your money to the government and NOT earning interest or use of the funds.  Now, we plan ahead to have the money ready to pay when it’s due.

If you owe, make you payment today!

Are Your Ready For Tax Time?

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It’s that time of the year that we start to think about taxes.

You are waiting to get your W-2’s, 1099’s and more, but there is still time to make tax moves for 2018.

Don’t forget it’s not too late to make your retirement contribution for last year. You actually have until April 15 to make your contribution for last year, if you haven’t maxed out your contribution for the previous year. This is turn could lower your income and may turn owing on your taxes to a refund.

Ask your accountant to do this to see if you can benefit from this. It never hurts to ask.  Personally, we have a tax meeting between Thanksgiving and Christmas to see where we stand, before we receive the actual tax documents to see what can and should be done.