Get Ready For Tax Season!

What to Do This Year to Lower Your Taxes

tax season tips, preparing for tax season, how to prepare for tax season

Fall is here. It’s time for thinking about cooler weather, Thanksgiving, falling leaves – and taxes? With a new tax code in place, a few hours spent on your taxes now can produce benefits in April with the savings of both time and money. The following tips may be able to help you achieve those goals.

Organize Your Files – Which documents do you need to file your taxes? Start with last year’s tax filing and see how many forms still apply. List all the additions that you may require and gather all the supporting documents that you need to back up itemized deductions.

Don’t forget to include W-2 and 1099 forms for all sources of income, especially if any part of your income comes through freelance work. Other forms that may apply are a 1095 form to verify health care coverage purchased through the marketplace, 1098 forms for various forms of interest and tuition payments, and Schedule K-1s from any ownership interests that you have.

Account for Changes – Make sure that any life changes that can affect your tax return are properly accounted for. For example, if you changed your name via marriage or divorce, you must notify the Social Security Administration and your employer of the change. Otherwise, your tax return may not match up with Social Security records, causing problems in processing your return.

If you are using an Individual Taxpayer Identification Number (ITIN), check the expiration date so that you have time to reapply if necessary. In addition, unless you have a self-selected PIN from a prior year, you will need last year’s adjusted gross income (AGI) for ID purposes when filing electronically. If you don’t have last year’s form handy, retrieve it now from the IRS or your tax preparer to avoid last-minute panic.

Review Deductions and Credits Now – Take a few minutes to review the available tax credits and deductions to see how many apply – and then make sure that you have the necessary paperwork (forms, receipts, etc.) to claim them. The Schedule A instructions for the past year make a good starting guide for deductions. The IRS made this early release draft of instructions available as a courtesy on October 9, 2018, and believe they have incorporated all the latest changes, but caution that there may be more changes due to unforeseen issues.

Pay special attention to tax credits because they provide a dollar-for-dollar decrease in your tax bill (as opposed to tax deductions that only reduce your taxable income) and you do not have to itemize to claim them.

Make Financial Adjustments – Now is a perfect time to check your withholding amount. Did your income change significantly throughout the year? A big bonus or a one-time income boost could leave you with a larger tax bill unless you adjust your W-4 to withhold more during the rest of the year.

This is also the time of year to make other tax-saving moves, such as maxing out your contributions to all retirement accounts, making charitable contributions, and selling off losing investments to offset any investment gains.

Choose a Preparer – If you don’t plan to do your own taxes, make sure to research preparers now. You may even want to reserve an appointment time before year’s end, so they can help you with some of the topics listed above. Otherwise, you may be stuck scrambling to find a tax preparer at the last minute – and who trusts a tax preparer that isn’t busy in early April? “The number one thing is finding someone who is honest and has integrity,” agrees Betterment Head of Tax Eric Bronnenkant. “It’s someone whom you’re trusting with all of your personal financial information, so that provision shouldn’t be taken lightly.”

What else should you look for in a tax preparer? Advises Bronnenkant, “You want to find someone who has experience with someone in your situations. Let’s say you work at a company, and you have stock options and other types of equity compensation, you want to work with someone who has experience with those types of investment vehicles. Not everyone does. Or let’s say you travel a lot, so you are working in multiple states. So, having someone who understands how to allocate your income between all the states you work in is important, too.”

We know it’s hard to get motivated to think about taxes at this time of year. Just remind yourself how grateful you will be in April that you took these steps in advance, enjoying a smoother filing and a lower tax bill – or maybe even a larger refund.

Don’t give identity thieves the chance to file a fraudulent tax return in your name.

This article was provided by our partners at MoneyTips.com.

 

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Scary Financial Facts

Because There’s Just Not Enough to Frighten Us This Halloween

financial facts, financial tips, financial advice

Are you ready for some Halloween horror stories? Forget Freddy Krueger, Jason Voorhees, or Michael Myers – we’ve got something really scary for you. Those three famous horror movie characters can’t compete with these three real-life financial horrors.

The Debt’s Coming from Inside the House! Get Out Now! – America’s national debt has topped a staggering $21.6 trillion – but your main concern is your own household debt. Unfortunately, America’s household finances aren’t in much better shape.

According to the New York Federal Reserve’s Q2 2018 Household Debt and Credit Report, aggregate household debt is $13.29 trillion – the highest collective debt ever. Household debt has been rising for the last sixteen quarters. Outstanding student loans alone have topped $1.5 trillion. Revolving debt – mostly credit card debt – hit $1.03 trillion.

Out-of-control spending can crush your finances. To prevent spending binges, make a realistic budget and stick to it. If you’re attempting to reduce existing debt, budgeting is even more important – you must have a surplus at the end of the month to pay down debt.

Sinking In Interest Charges – Beware the interest rates that eat your income. They sneak up on you, waiting until you’re ready to buy a home or put extra charges on your credit card – and then they attack. Your income is slowly consumed by interest charges, leaving you nothing to live on. If only you had kept your credit score high…

The fiends at the Federal Reserve have been slowly piling on 0.25% rate hikes – three in 2017 and three in 2018 to reach 2%-2.25% with one more hike expected before the year is out. They plan to raise rates three more times in 2019. Each rate hike eventually gets passed on to you. Can you keep your head above water, or will higher rates push you under?

Fight off increasing interest rates by paying off all bills on time and controlling your spending. Never charge more than you can afford to pay off each month. You won’t have to worry about credit card interest if you don’t carry a balance – and your higher credit will qualify for better loan/mortgage rates.

The Incredible Shrinking Credit Score – Who could be at the door this Halloween? Surprise, it’s you – or an identity thief pretending to be you, buying a hundred smartphones with a fraudulent account or twenty laptop computers on your MasterCard. If you don’t check your credit report regularly, you may not see the danger until it shows up as overdue bills and a ruined credit score.

A 2018 Harris Poll survey found that nearly sixty million Americans have been affected by some form of identity theft – around 18% of the U.S. population. According to Javelin Strategy & Research, approximately 16.7 million individuals were identity theft victims in 2017 alone, with an average loss of just over $1,000.

Whether they’re fraud alerts, credit freezes, or credit monitoring services, find a protection strategy that works for you – and use common sense protections like strong passwords, anti-virus software, and shredding of documents before disposal.

You may not see any trick-or-treaters dressed as identity thieves or high-interest rates (if you do, please give them extra treats for imagination). However, those financial monsters are scary because they’re real – and they cause real financial damage.

Take preventative action and you can avoid these horrors, or at least minimize them. Don’t be the financial equivalent of horror movie teens that wander out into the woods alone at night looking for their missing friends. You know how that works out for them.

This article was provided by our partners at MoneyTips.com.

 

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Top Seven Ways to Save on Halloween

Easy Ways to Carve Halloween Costs like a Pumpkin

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To some of us, Halloween is an enjoyable time to dress up our children and/or ourselves, carve scary pumpkins, decorate our home with spooky effects, gorge on treats, and spend the next morning jogging off a candy binge. To others, it is a time to figure out how much candy they need to have on hand to avoid cleaning toilet paper out of their trees the next morning.

Regardless of what you do the morning after Halloween, with these simple steps you can wake up with a thicker wallet than usual, and not just from hiding Hershey’s Kisses in it.

  1. Buy Bulk Candy – You can save tremendous money by buying individually wrapped bulk candy instead of the overpriced brand name assortments at your grocery store or pharmacy. Do make sure that you buy individually wrapped candies; parents will (and should) shy away from letting their children try loose candies because of tampering concerns.
  2. Make Your Own Costumes – It takes a little more thought, but you can come up with creative ideas for your children’s costumes without having to go to the party store and purchase a pre-packaged costume. Get your kids involved in the creative process, and prepare to be amazed at their ideas.

As for you, what if you don’t like to dress up at all? Get some spare tax forms and go as a tax collector. How frightening is that?

The point is that you can come up with something clever without an elaborate costume. As a result, you will be more comfortable at the Halloween party, appropriately warm, and not burdened by the realization that your elaborate costume makes it impossible to use the bathroom.

  1. Make/Recycle Decorations – You can save significant money by making your own Halloween decorations out of inexpensive craft materials and leftover project materials you may have around the house. Old boxes, construction paper, leftover fabric or worn-out clothes… with a little glue, paint, and markers, they can be made into tombstones, spiders, ghosts, and other timeless classics.
  2. Use Thrift/Dollar Stores – Why pay more than you have to? Thrift shops are full of costumes and decorations for the creative-minded soul at rock-bottom prices. Dollar stores also stock seasonal bargains and are a great source for simple decorations or the materials you need to make them. Go early, or the selection will be picked over.
  3. Pool Your Resources – Find a group of friends with whom you can share decorations and costume pieces. It’s a great way to get more life out of materials without doing the same thing every year.
  4. Bring-Your-Own Parties – If you are hosting a party, try making it a bring-your-own buffet. Your guests may surprise you with tasty holiday treats, and if not… well, what could be more frightening than a mystery casserole? Turn it into your advantage with a creative ingredient list: Eye of Newt, and a dash of powdered toenails…
  5. Take Advantage of Post-Halloween Discounts – It won’t help you this year, but stores will be clearing out their costume and decorations shelves the day after Halloween to expand the Thanksgiving and Christmas displays. You can pick up great bargains to store for 10/31/2019.

You can also pick up Halloween candy at a discount, but don’t kid yourself into thinking that will last more than a week. Show up as soon as the store opens and be prepared for hand-to-hand combat in the candy aisle. The day after Halloween is Black Friday for candy addicts.

Get an extra level of Halloween enjoyment this year by having a great time and saving money in the process. You will enjoy the glow of a fatter bank account, and you probably will not feel nearly as guilty when you raid your children’s Halloween candy after they go to sleep.

This article was provided by our partners at MoneyTips.com.

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