Have you filed your taxes yet? April 15th is largely known as tax day, the deadline for filing and paying our taxes for the previous year. But it’s also the deadline to make 2014 contributions to three types of accounts that can reduce your taxes now, later, or both: Continue reading “You Have Less Than a Week to Make These Tax Saving Moves”
My friend Sana is awesome. She has the ability to point out a view that I may not have considered before and makes me take a step back a minute and consider other angles. Maybe this blog post can do for others what she has done for me at times.
Continue reading “In Defense of Tax Refunds”
Spring is a busy time of year here at Financial Finesse. While we are always busy providing financial guidance with passion and objectivity, the tax season and the April 15th deadline provide an extra sense of urgency for many callers reaching out to us on the Financial Helpline. Many of the income tax specific calls we receive can be characterized as information seeking and tend to be reactive discussions. When you think about the tax filing burdens created by a complicated tax code, the IRS can strike fear into hard working taxpayers to try and get things right. Continue reading “Stop Going Through the Motions of Filing a Tax Return”
I recently received a panicked call from a friend of mine who had just graduated from graduate school with $120k of student loan debt. Since she had trouble making the payments, she signed up with the new “Pay As You Earn” student loan forgiveness program. Then she got an ugly surprise… Continue reading “The Good, the Bad, and the Ugly of the New Student Loan Forgiveness Program”
I recently received a question after one of my workshops from a woman who was wondering if she made a mistake paying her mortgage off early because she no longer has the mortgage interest deduction. I can’t tell you how many times I’ve gotten different versions of that same question (including after a later workshop session that same day). Here are several reasons why this is a classic case of letting the tax tail wag the dog: Continue reading “Is Paying Off Your Mortgage Worth Losing The Tax Deduction?”
A couple of weeks ago, I received a desperate email from Alex who was using tax preparation software to help him prepare his tax return. It seems he thought he could avoid taxation on his 401(k) from his prior employer by rolling it directly into a Roth IRA. While it’s true he could directly roll funds from his 401(k) to a Roth IRA, it is NOT true that this will avoid taxation. Only after-tax money may be deposited into a Roth IRA, therefore the amount rolled over—a sum of nearly $20,000—would be treated as taxable income for the year. Continue reading “Garbage In, Garbage Out: The Problem With Tax Preparation Software”
In recent weeks, millions of taxpayers have been realizing the true impact of the Affordable Care Act as they file their tax returns. It’s probably no surprise the individual mandate required most Americans to have health insurance coverage as of January 1, 2014. If you had employer-provided health insurance coverage for most of 2014 or you purchased coverage through a private exchange or directly from an insurance company, the health insurance mandate will not have an impact your taxes. Continue reading “Last Minute Tax Savings With An HSA”
It’s February, and that usually means that you are ready for winter to be over, you are thinking about what to get that special someone for Valentine’s Day, and you can’t decide whether to do your own taxes or to let someone do your taxes for you. For years, taxpayers have been baffled by the federal income tax system and for good reason. The number of pages in the Wolters Kluher CCH Standard Tax Reporter reached 73,954 in 2013! However, there’s probably only a handful of those pages that actually apply to the average taxpayer, while the rest of those pages are technical jargon, legalese, and other stuff that’s most irrelevant to you and me. Continue reading “When To Hire a Tax Preparer”
I just got done pitching out a foot-high pile of holiday sale catalogs, magazines that I never got to read over the holidays, and donation requests from charities and schools that for some reason didn’t feel like I paid them enough tuition while there as a student. Am I the only one out there who’s looking online for a new smaller mailbox? But just when we thought it’s safe to downsize our mailboxes, the Affordable Care Act (also known as the “ACA” and “Obamacare”) and IRS regulations have added more mail to the winter pile-up, the new series of IRS information forms that support whether you have health insurance that complies with the “Obamacare” rules. These forms started showing up late this January and will every year after. Continue reading “Obamacare Tax Forms Are Coming to a Mailbox Near You”
I admit it. I goofed. Despite being a financial planner who often helps people with their benefits, I made a mistake with my own. As I was looking at my expenses and taxes for last year, I realized that I could have reduced my taxes by $230. That’s the amount I would have saved if I contributed the $817 I spent on eligible vision and dental expenses last year to my company’s limited-purpose FSA (flexible spending account). Continue reading “My $280 Mistake”
I recently opened my mail and found my first tax documents for 2015. You know what that means…it’s the start of tax season! If you’re wondering if there’s an easier and/or cheaper way of accurately doing your taxes, here are some options: Continue reading “How Should You Do Your Taxes?”
I recently met with Dave, a long-term employee of a large company who came to me with a tinge of guilt in his voice. “You’re gonna yell at me, but I’ve got about 20% of my 401(k) invested in my company’s stock. I’ve been putting money in it since they started allowing me to, and it’s done about as good or better than my other stocks. The re-balancing tool on the plan website says I have too much company stock, and you’re gonna tell me to sell most of it – right?” Continue reading “Net Unrealized Appreciation is an Often Unrealized Option”
If Christmas is the most wonderful time of year, why does it always have to be followed by its stressy and messy cousin “Tax Time.” Remember that New Year’s resolution to get your financial life in order? Well, it’s not too soon to start organizing the files, papers and “stuff” needed to do your taxes. Continue reading “5 Tips to Make Tax Time Less Taxing”
This New Year’s Eve, millions of people across the country will make New Year’s resolutions about things they’d like to do in 2015. I’m all in favor of this annual tradition but to mix things up a bit, I’m going to suggest a few things that you DON’T want to do in 2015—something I’m calling “No” Year’s resolutions: Continue reading “My “NO” Year’s Resolutions!”
I have never been a big fan of shopping during the busy holiday season, where we are all encouraged to buy, buy, buy no matter where we turn. In fact, I personally prefer to do my shopping in the convenience of my home office and avoid the consumer-driven hustle and bustle as well as the traffic. Click, click, done! Continue reading “Last Minute Moves to Save on Taxes for 2014”
When you see your 401(k) balance or even a projection of your future balance when you retire, do you really know what that number means for your retirement? If you’re like most people, you probably don’t. A $200k balance may look like the most amount of money you’ve ever had so you can easily think it will be more than sufficient even if it turns out to be nowhere near enough to generate the income you’ll need to retire comfortably. Continue reading “3 Hidden Pitfalls Coming to a 401(k) Statement Near You”
Are you worried about paying too much in taxes this year? If you wait until you file next year, it will be too late to do much about it. As the 2014 year winds down, you’ll want to note some simple things you can do to reduce the amount of income tax you owe Uncle Sam this year, while planning for the year to come. Continue reading “10 End-of-Year Tax Tips”
My oldest child, Rachel, is a junior in high school, and while we enjoy having her around the house, we know that soon she’ll be looking into college. In case you haven’t looked lately, the average cost for a four-year in-state public institution is $9,139—and that’s just for tuition and fees! Over four years, that’s going to cost upwards of around $40,000. By itself that might not seem so bad, but when you consider that Rachel has three younger brothers, that price tag starts to look awfully daunting. Continue reading “The Do’s and Don’ts of Student Loan Repayments”
I read this astonishing article today titled “3 reasons to ditch your IRA.” The author makes the case against contributing to traditional IRAs but all his arguments could be used against traditional pre-tax 401(k) plans as well. Before you cancel your pre-tax retirement account contributions, let’s take a look at his arguments and why they might be problematic: Continue reading “3 Reasons Not to Ditch Your IRA”
One of my favorite pre-holiday meetings involves gathering the kids together to discuss our holiday plans. In our household, it’s inevitable that kids will find that perfect moment of cute childhood brilliance to break out their Christmas wish list at a moment when they are polite and well-behaved. In the spirit of giving to others, my wife and I encourage them to also create a wish list for things they would like to give to others in need. Before you start donating online or breaking out those checkbooks, let’s review the basics of why, when, who and how. Continue reading “The Season of Generosity”
