Here are some interesting facts from Wallet Hub
Here are some interesting facts from Wallet Hub
Yes, it’s that time of year again – tax time. We’ve had some delays on the government’s end. You won’t be able to file early in January (if that was your plan). That’s tough luck if you were hoping to get your refund right away. But, it could have been worse. We may have had to wait until late March.
The delay is caused by last minute tax changes. Forms have to be adjusted before your tax preparer can submit your taxes. The earliest you can file electronically this year is January 30th. And, you may have to wait until late February or early March if you’re claiming credits related to energy, property or business,
In the meantime, you can get your taxes prepared.
Don’t delay things on your end just because you can’t file. 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.
There you can learn
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.
Yes, it’s that time of year again – tax time! If money is tight, you may be hoping for a refund. But, like many people, you probably have to use part of your refund to pay for having your taxes done.
But, what if you didn’t have to pay a tax preparer? If you have a simple tax return, and you earned less than $50,000, you can qualify for FREE tax preparation with VITA (more on VITA below). Or, check out AARP Foundation Tax-Aide, which has different guidelines by state.
These are the two safest and most reliable options for no-cost income tax preparation (that I know of.)
I know there are some other companies that promise free preparation, but watch for these restrictions:
With VITA and AARP, you don’t have to rush and they do both Federal and State (if local rules allow).
Find out if you qualify for VITA (Volunteer Income Tax Assistance)
Volunteer Income Tax Assistance (VITA) has volunteers trained by the IRS to do tax preparation for people who are low to moderate income (families earning less than $50,000.) There are locations in every state, typically at public buildings (like libraries, schools, or town government offices). All have different days and hours. Find the location that meets your schedule by visiting the IRS website or calling (800) 906-9887.
Find out if you qualify for AARP Foundation Tax-Aide
AARP also offers tax preparation services under their program AARP Foundation Tax-Aide. The program gives special attention to those over 60 years of age. There are eligibility requirements that must be met to take advantage of this service. For more information go to AARP.org
These programs are both designed for those with relatively simple tax returns. People who have more complicated returns that include rental property, buying and selling of investments, or businesses are usually not eligible. Check with each organization for locations and eligibility requirements.
Remember: this year April 15 falls on a Sunday and Monday is a Federal holiday, so you have two extra days to file your taxes!
The end of the year is coming up. People are meeting with their tax preparers to find out how to increase their deductions.
Now is a great time to increase your charitable donations. The charities know it too, so they increase their advertising this time of the year. Most of them look like great causes, but, you need to determine if the charity is legitimate and how your donation will be used.
Choosing a charitable organization can be challenging. Here’s what you need to look for:
How do you find that information? Go to www.Give.org before making your donation.
Once you have chosen your charities, make sure you have the proper documentation for tax purposes.
When you open your paycheck in August you will notice that it’s smaller. The new CT income tax deduction took effect August 1, but it went into effect retroactively from January 1st (7 months past).
With only five months left in the calendar year, the money has to be made up. From now until the end of the year, you will be having more than double the CT income tax withdrawn from your paycheck to catch up.
Come January 1, 2012, you will go back to paying the regular new income tax amount.
Check with your tax preparer, but it is my understanding that the tax increase will not affect you if you are filing your taxes as single and earn less than $50,000, or married and earn less than 100,000. If that’s you, you won’t see a difference in your paycheck now or in January.
Connecticut Sales Tax Increases
No matter your tax bracket, you will be paying more sales tax when you shop in CT. In case you didn’t know, CT shoppers are now paying 6.35% as of July 1 (up from 6%). And you will pay it on more items. Some items that were tax exempt in the past are now taxable. For example, you didn’t used to pay sale tax on clothing under $50, but now you will as you shop for back-to-school. Remember that there is a tax-free week for clothing from August 21 to 27 for purchases under $300.00, so you may want to plan your shopping ahead.
It’s fine if you have the money, but what if you don’t have the money to pay by the due date? Let’s look at three possible scenarios:
Failure to File:
The worst thing that you can do is not file your federal taxes at all. Remember, filing isn’t the same as paying. It’s important to file your taxes by the deadline to avoid the penalty. How late you file determines the fine. It can be up to 25%.
You might be afraid to file your taxes if you don’t have the money to pay. After all, that’s admitting you owe a debt. But, you won’t be kidding anyone – trust me.
If you have the money to pay by the deadline, you are all set. If that is not possible, then work out a payment plan to keep the penalty fees as low as possible.
Failure to Pay:
Failure to pay means that you filed your returns on time, but didn’t make the payment in full by the tax deadline. The IRS will add a monthly percentage to what you owe each and every month until the amount is paid in full, but it is substantially better than the first penalty.
Lastly, interest is charged on the amount you owe if you don’t pay by the due date. At first, the IRS charges 4% but they increase the interest rate every three months.
Preventing a Big Tax Bill
Have your tax preparer look at your withholdings and make any adjustments necessary to owe less next year. If you do your taxes yourself, you might want to consider consulting an accountant.
Remember: you don’t want to over withhold your taxes – that gives the federal government a loan for free. Instead, you want to withhold just the right amount, so if you do owe, it’s a very small amount, and if you get return it’s a very small return.
Why is a big tax refund a bad idea? I’ve given you three reasons below. Let me know in the comments section if you can think of more.
Loaning your money for free to someone who doesn’t need it. What if I told you that you were going to loan someone $2,000 this year, and you weren’t going to charge interest. On top of that – you are going to wait a year to get it back, and ask for it in writing. Are you laughing at my question? If you are getting a tax refund this year, that is exactly what you have done! You loaned the government a portion of your paycheck every week, you didn’t receive any interest on that loan, and now you have to fill out a tax form to get it back.
Putting your money to work. The average tax return in 2008 was $2,683. So, you are not alone in doing this, but you should make sure it doesn’t happen again. When you see your tax preparer, ask him to adjust your withholdings so that you will not get a huge refund. I know you don’t want to owe $2,000 in taxes. Instead, aim to have the correct amount of taxes withheld. This way, you can have that extra money earning interest in your savings account, or saving you interest by going towards extra payments on your debt. That is how you make your money work for you.
You get less money with a tax refund. Are you worried that you won’t have the big check every spring for that special purchase? You might assume that a tax refund is a good savings plan. It’s not – good savings plans pay interest. Put the extra money in your own savings account instead. Divide your tax refund by the number of times you get paid each year. Then, have that amount automatically deducted from your paycheck and put into a savings account. If you want to have $2,500 saved in a year, that means you need to save about $48 a week. You are probably thinking that you don’t have an extra $48. Trust me; you will not miss money that’s not in your paycheck. Besides, if you’ve adjusted your tax withholdings, you’ll have more take-home pay.
It’s that time of year: holiday bills are arriving and you’re not sure you have the money to pay them. If you live on the east coast, you can add in unexpected snow removal costs. Where will you get the extra money? You might think that your tax refund is where you’ll get the money you need. That’s a good thought, but don’t sign up for an instant refund.
Some tax preparers or quick cash companies will tempt you with faster returns. They give you part of your tax refund ahead of time as a loan. Don’t do it! This is one of those money drains that isn’t worth the cost. All loans have fees and interest. With quick income tax return loans, the fees and rates can be outrageous. Let’s face it: companies who lend money are in the business of making money. It wouldn’t be worth their time and effort to give you a cheap loan. I strongly urge you to skip the quick cash and speed up the refund process with these three suggestions.
If you do these three things, you can have your refund back in your hands in weeks. Then you will have the money you need and keep more of it in your pocket.
With the end of the year coming up, people are being asked to make donations to many organizations While others are planning ahead for the end of the tax year Either way, you need to make sure the charity that you are donating to is legitimate.
With many people out there to scam people, choosing a charitable organization can be challenging Here’s what you need to look for:
To find out this information go to www.Give.org to do your research before making your donation Once you have decided to make your donation, then you need to make sure you have the proper documentation for tax purposes.
For monetary donations, a cancelled check would be your receipt For non-cash items such as food, clothing, household items, furniture etc, you will need to make an itemized list of the items and the value Make sure to get a receipt from the organization that you are making the donation to Attach this to your itemized list and keep with your tax records.