PRESENTS
Refund Madness Inside this issue • Save Money on Taxes • S.C. Tax Refunds Now on Debit Cards • Tax Filing Deadline Pushed Back • 2012 IRS e-file Refund Cycle Chart • IRS Releases Revised Tax Guide • Planning Ahead Key to Smooth Tax Returns
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IWANNA® Refund Madness ~ January 24, 2012
Do Homework to Find the Right Bank
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hen searching for a bank to do their personal banking, many people find banks aren’t all that different from one another. Banks offer similar services, and many have similar rules and regulations with regards to opening a personal account. their borrowing with them by offering perks like free checks, low-interest credit cards, and low-interest loans. In addition, some banks waive the minimum balance requirements for customers with multiple accounts. Restrictions and Penalties Men and women who struggle to maintain a minimum balance in their account should look for a bank with no minimum balance requirements. Such banks do exist, and these accounts are often most attractive to young professionals who are just getting on their feet. The reliability of online banking services, be it on a computer or through a cell phone app, is something that bears considerable weight with consumers looking for a bank to handle their personal banking.
Though banks might be similar, the individuals who open accounts are anything but. And when it comes to finding the right fit to for personal banking, men and women should consider what’s most important to them before opening a new account.
own bank might also be charging you an additional $2 on top of that.
If you rarely use another bank’s ATM, then ATM accessibility shouldn’t influence your decision too much. But if you are routinely spending $4 to access your own money, emphasize finding a bank ATM Accessibility No one enjoys pay- with more accessible ing ATM fees, and some ATMs. people are more adept at Additional Needs avoiding them than others. Men and women who If those fees have been catching up with you, look have a mortgage, car loan, for a bank with branches or other type of loan from or ATMs located near your a specific bank might home and your office, the want to consider making two places you likely spend that bank their choice for the most time. Nowadays, personal banking as well. ATM fees can be as much That’s because banks will as $2 when using another often entice borrowers to bank’s machine, and your do their banking as well as
When discussing restrictions with the bank, also inquire about the penalties. If you have a problem maintaining a minimum balance, you might also find yourself bouncing a check or overdrawing on your account. If that’s a realistic possibility, find a bank that offers adequate overdraft protection, but beware that such protection typically comes at a hefty cost, oftentimes via a high fee. Technology Nowadays, many people go months if not years without ever stepping inside an actual bank. Online banking has made it easier than ever before to track spending, move around various accounts, and pay bills. If on-line banking is especially important to you, find a bank
the-go professional who uses a mobile device to do your banking, then you will want a bank with a reliable, secure, and proven app for your phone. Some Another thing to con- banks have been slower sider is whether or not a to embrace this particular bank has an app for your form of banking than othphone. If you are an on- ers, so do your research into banking apps. that makes it easy to do your banking via the Web. Some banks charge for their on-line bill-pay services, while others don’t.
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IWANNA® Refund Madness ~ January 24, 2012
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Take Your Time in Picking an Auto Loan Lender
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erhaps because of the economic instability of the last several years, today’s consumers are understandably wary when seeking loans. But even the most qualified borrowers know that certain purchases, including automobiles, require the assistance of a lender. An auto loan is a great way for consumers to purchase a new and reliable vehicle, but finding the right lender isn’t always so easy. However, there are steps borrowers can take to make the process less stressful and ensure they find themselves working with a lender who’s trustworthy. Take to the information superhighway. The Internet is a great asset to prospective borrowers, who can readily access reviews from fellow borrowers to get an idea of which lenders are good to work with and which ones to avoid. On-line reviews can offer prospective borrowers some perspective as to how different lenders treat their customers. A lender who routinely receives rave reviews is one borrowers should seek out. But some lenders might get generally positive reviews with one notable exception. If that exception is poor customer service, and poor customer service appears in several reviews, then it might be best to look elsewhere for a loan. Comparison shop. Shopping for an auto loan is not all that different from shopping for a new television or other appliance. Not many of today’s consumers will buy a new television without first comparing a number of televisions, and the same principle should apply when shopping for a loan.
When seeking an auto loan, borrowers must take it upon themselves to find a trustworthy lender. ers who aren’t flexible. Don’t be caught off guard. Borrowers should look for lenders who are clear when spelling out terms and conditions. The recent housing crisis illustrates just how careful borrowers must be before signing A lender should also on the dotted line. Though be flexible with regards to loan agreements aren’t as payment options. Some compelling as a good novborrowers want higher el, borrowers still must go monthly payments and a through the agreement, no shorter term loan, while matter how tedious, and others want lower monthly present any questions that payments over a longer pe- arise to the lender. riod of time. Lenders should It’s not uncommon for be willing to work with borLook for a flexible lend- rowers on a repayment lenders to riddle loan agreeschedule that best suits ments with hidden expenser. Lenders should be some- their needs. Avoid any lend- es, and it’s the responsibilDifferent lenders offer different rates, and rates are rarely set in stone. Savvy consumers should seek out the best rates from a handful of lenders, and then use this information to negotiate better rates. Contrary to popular belief, lenders will compete for business, and when that happens, the borrower wins. It might take some time and research, but if the end result is a lower interest rate, that can mean hundreds, if not thousands, of dollars saved over the course of the auto loan.
what flexible, particularly if borrowers propose the idea of changing the loan’s terms and conditions after a certain period of time. Many lenders are willing to do this, but borrowers must bring it up before signing any papers.
ity of the borrower to know what they’re signing before they sign it. Lenders who don’t willingly explain each aspect of the loan agreement, including how much a borrower will have paid by the time the loan has matured, might have something to hide and should therefore be avoided at all costs. Finding an auto loan lender often requires some research on the part of the borrower. But such hard work can result in substantial savings and a much happier borrower in the long run.
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IWANNA速 Refund Madness ~ January 24, 2012
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IWANNA® Refund Madness ~ January 24, 2012
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Take Time for Careful Estate Planning
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ith regards to finances, the future is a big part of many people’s financial planning efforts. Be it the kids’ college tuition or the day when retirement finally arrives, financial planning is all about the future.
Though college and retirement funds garner the most attention, men and women must also make time for estate planning. Estate planning is the process of arranging for the disposal of an estate and is done to help minimize uncertainty upon an individual’s death. This planning also reduce taxes and additional expenses that might arise if a person passes away without having left a will or another means of disposing of his or her estate. Regardless of the size of an individual’s estate, there’s no reason not to have an estate plan in place. The following are some of the basics of estate planning, which should be a priority for men and women, young and old. An estate plan is more than just a will. Though an up-to-date and specific will is an important element of a good estate plan, there are other elements as well. In addition to a will, an estate plan should assign power of
attorney, which gives a person of an individual’s choosing the right to manage that individual’s financial affairs if they are unable to do so themselves. Power of attorney should be assigned in the case of a person’s death, but also if an unforeseen medical issue arises and a person is no longer capable of managing their affairs. There are two types of power of attorney that are essential to know when estate planning. Springing power of attorney goes into effect when circumstances that the individual specified, such as incapacitation, occur. In order for this to go into effect, the agent designated must typically produce proof of an individual’s incapacitation. Durable power of attorney goes into effect immediately and the agent does not need to prove incapacitation. When choosing an agent to assume power of attorney, individuals need to make this decision wise-
ly, choosing someone they trust who can competently manage their affairs. Assets include a host of things, from investment accounts to real estate to retirement savings. Individuals must take careful inventory of all of their assets and determine to whom these assets should go if they die or who should gain control of them if individuals become incapacitated. This means leaving no stone unturned. If there are any questions about specific assets, then legal wrangling or even government taxation upon these assets is likely to take place. Many people hear the word trust associated with financial dealings and immediately assume it only applies to the wealthy. Nothing could be further from the truth. A trust enables men and women to put conditions on the distribution of their assets upon their death, including when and how these
assets will be distributed. In addition, a trust might just protect these assets from creditors or lawsuits and help any heirs avoid probate court, which can be a costly and tedious process. Though trusts aren’t necessarily for everyone, they also aren’t exclusive to the very wealthy. Many people Men and women should prioritize estate planmake the mis- ning regardless of their age or financial status. take of leaving all of their assets to their spouses upon However, when the surtheir deaths. While this is viving spouse dies, if he or well-intentioned, it doesn’t she leaves that money to always work out best for their surviving children, then men and women with chil- they are likely going to pay dren. Individuals can leave significantly more in estate an unlimited amount of tax. In addition, when decidmoney to their spouse upon ing to simply leave all astheir death, and that money sets to a surviving spouse, cannot be taxed. this is, in a sense, leaving the difficult decision of asset allocation to the surviving spouse. What’s more, should both husband and wife pass away in an accident at the same time and all assets were left to a spouse, this can make it very difficult, contentious and costly for surviving family members to divide up any assets left behind. Estate planning is something few people will embrace with open arms. But as morbid as estate planning might seem, it’s a necessary step for adults who want to secure their own futures should they become incapacitated or the futures of their loved ones when individuals pass away.
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IWANNA® Refund Madness ~ January 24, 2012
S.C. Tax Refunds Now Available on Debit Cards
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he South Carolina Department of Revenue announced recently that taxpayers will soon be offered a new method for receiving their individual income tax refunds.
For the 2012 individual income tax filing season, the SCDOR, working with Bank of America, Merrill Lynch, and Visa, will provide taxpayers with an income tax refund prepaid debit card in place of a paper check. The SCDOR Income Tax Refund Prepaid Debit Card is intended to eventually replace the printing and mailing of paper checks, saving the state of South Carolina significant costs in tax dollars and processing time. South Carolina taxpayers will still have the option to designate direct deposit or to receive a pa-
per check on their income card account created tax return if they do not for the taxpayer. Card prefer a debit card. recipients may transfer the refund amount into “Through the SCDOR their personal bank acIncome Tax Refund Pre- count just as they would paid Debit Card and direct deposit a paper check. deposit options, SCDOR The card is a particularly aims to expedite the pro- convenient option for cess in which individuals taxpayers who do not receive their income tax have a traditional bank refunds. It is our goal to account. make this method as costCardholders can coneffective and easy to use duct a variety of transas possible for the South actions without fees at Carolina taxpayers,” stat- Bank of America ATMs, ed Director Jim Etter. on-line, over the phone, and everywhere Visa With the SCDOR In- debit cards are acceptcome Tax Refund Prepaid ed. Customer service is Debit Card, the refund is available from Bank of delivered electronically America 24 hours a day, to a unique prepaid debit seven days a week. If a
card is lost or stolen, it will be replaced immediately at no charge, and cardholders are protected against any unauthorized or fraudulent charges.
For more information on the SCDOR Income Tax Refund Prepaid Debit Card and filing SC individual income tax returns, visit sctax.org.
Save Money on Taxes with Charitable Donations W
e’ve all heard the saying about nothing being certain but death and taxes. As the calendar year comes to a close, many people might be thinking about how to reduce their taxable income from 2011. Charitable giving is one way to pay less in taxes.
In many cases, tax-deductible charitable giving can save a person money in the long run. The added bonus is that it can feel good to give as well. Making charitable donations can save a person thousands in tax dollars, provided the correct steps are taken. 1. Ensure the charity is a tax-exempt organization eligible to receive tax-deductible donations.
2. Be sure to keep all receipts for charitable giving throughout the year. Generally donations less than $250 can be recorded with a cancelled check. Other donations will need a written acknowledgment from the charity. 3. Itemize donations when filing tax returns. If non-cash donations were given (such as clothing or automobiles) be sure to complete the applicable
tax form. 4. Figure out the fair market value of items being donated that aren’t cash. This will help determine the value of the charitable deduction when it’s time to file a tax return. 5. Address any questions concerning charitable donations to a knowledgeable tax preparer or accountant.
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IWANNA速 Refund Madness ~ January 24, 2012
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IWANNA® Refund Madness ~ January 24, 2012
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TO
FIT YOUR BUDGET PAYMENTS
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Fa mily Auto of Sparta nburg IS NOW
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Bring current pay stub and a piece of mail with your current address and name AND RIDE HOME TODAY!
864-577-0728
2003 Chevy Malibu LS Loaded w/Leather, Wood Grain Trim, 95K Miles
2005 Chevy Silverado Leather, Nice
2005 Chevy Impala All Power, Auto, Looks Great
2004 Kia Spectra Gas Saver
2003 Chevy Trailblazer 4x4, All Power, CD
2001 Chevy Tracker LT 4x4
2001 Ford Expedition Eddie Bauer Edition, Loaded
1999 Lincoln Town Car Loaded w/Leather
2002 Toyota Camry LE Auto, All Power, Runs Great
2004 Kia Spectra 4 Cyl., Auto, All Power, Gas Saver
2003 Mazda Protege Sporty, Sunroof, Gas Saver
2002 Chrysler PT Cruiser Auto., All Power, Nice
2003 Chevy Malibu Xtra Clean
1999 Ford Ranger Runs Great, Auto
2003 Mercury Sable G3 Nice Car
2000 Chevy Blazer 4x4, Loaded, Great Condition
2001 GMC Jimmy All Power, Sunroof, Great Condition
2002 Ford Focus Gas Saver, Extra Clean
2002 Mazda Tribute All Power, Auto, Runs Great
2000 Mercury Sable Auto, All Power, CD
2007 Kia Rio Gas Saver, Sporty
2003 Pontiac Vibe Sporty
2000 Jeep Grand Cherokee Great Condition
2005 Toyota Corolla XRS Gas Saver
2003 Mazda Protege 5 Auto., All Power, Sporty
2000 Chevy Venture One Owner
2000 Chevy Malibu Loaded, Only 96,000 Miles
2002 Mazda Protege Gas Saver
2000 Jeep Grand Cherokee 4x4
2007 Pontiac Grand Prix All Power, Auto., Wood Grain Trim
2005 Hyundai Elentra Like New
2005 Chevy Impala Nice
2003 Nissan Altima Runs Great, Only 95,000 Miles
2000 Jeep Cherokee Super Duty
2000 Chevy Impala Auto., All Power, Runs Great
2005 Dodge Caravan Loaded
2000 Chevy K2500 4 Door, Extended Cab
2004 Saturn Ion Sporty
1997 Ford F150 Super Duty
TO
1999 Ford Explorer Sport V6, Auto, Loaded, 4x4
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FI
*Certain restrictions apply. See Dealer for Details.
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www.FamilyAutoofSpar tanburg.com
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* Inquire inside for down payment options • Down payment does not include tag a nd tax
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1780 Asheville Hwy • Sparta nburg, SC 29303 M-F 9AM - 6PM • SAT 10AM - 3PM • SUNDAY HOME WITH THE FAMILY!
Directions: From Hearon Circle, Go Towards Downtown. Family Auto is 1/2 Mile on Right.
TO
Apply Online:
864-577-0728
YOUR BUDGET PAYMENTS
2 Year 36,000 Mile Warranty!
Not All Qualify - See Dealer For Details
0003514847
All Applications Will Be Accepted Down Payment Does Not Include Tax and Tag Fees
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PAYMENTS
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IWANNA® Refund Madness ~ January 24, 2012
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FIT YOUR BUDGET PAYMENTS
TO
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FIT YOUR BUDGET PAYMENTS
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TO
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYME
Fa mily Auto of Sparta nburg IS NOW
TO
FIT YOUR BUDGET PAY AYMENTS A MENTS
TO
Bring current pay stub and a piece of mail with your current address and name AND RIDE HOME TODAY!
864-577-0728
2003 Chevy Malibu LS Loaded w/Leather, Wood Grain Trim, 95K Miles
2005 Chevy Silverado Leather, Nice
2005 Chevy Impala All Power, Auto, Looks Great
2004 Kia Spectra Gas Saver
2003 Chevy Trailblazer 4x4, All Power, CD
2001 Chevy Tracker LT 4x4
2001 Ford Expedition Eddie Bauer Edition, Loaded
1999 Lincoln Town Car Loaded w/Leather
2002 Toyota Camry LE Auto, All Power, Runs Great
2004 Kia Spectra 4 Cyl., Auto, All Power, Gas Saver
2003 Mazda Protege Sporty, Sunroof, Gas Saver
2002 Chrysler PT Cruiser Auto., All Power, Nice
2003 Chevy Malibu Xtra Clean
1999 Ford Ranger Runs Great, Auto
2003 Mercury Sable G3 Nice Car
2000 Chevy Blazer 4x4, Loaded, Great Condition
2001 GMC Jimmy All Power, Sunroof, Great Condition
2002 Ford Focus Gas Saver, Extra Clean
2002 Mazda Tribute All Power, Auto, Runs Great
2000 Mercury Sable Auto, All Power, CD
2007 Kia Rio Gas Saver, Sporty
2003 Pontiac Vibe Sporty
2000 Jeep Grand Cherokee Great Condition
2005 Toyota Corolla XRS Gas Saver
2003 Mazda Protege 5 Auto., All Power, Sporty
2000 Chevy Venture One Owner
2000 Chevy Malibu Loaded, Only 96,000 Miles
2002 Mazda Protege Gas Saver
2000 Jeep Grand Cherokee 4x4
2007 Pontiac Grand Prix All Power, Auto., Wood Grain Trim
2005 Hyundai Elentra Like New
2005 Chevy Impala Nice
2003 Nissan Altima Runs Great, Only 95,000 Miles
2000 Jeep Cherokee Super Duty
2000 Chevy Impala Auto., All Power, Runs Great
2005 Dodge Caravan Loaded
2000 Chevy K2500 4 Door, Extended Cab
2004 Saturn Ion Sporty
1997 Ford F150 Super Duty
TO
1999 Ford Explorer Sport V6, Auto, Loaded, 4x4
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
TO TO
FI
*Certain restrictions apply. See Dealer for Details.
TO
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
TO
www.FamilyAutoofSpar tanburg.com
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
* Inquire inside for down payment options • Down payment does not include tag a nd tax
TO
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET
TO
1780 Asheville Hwy • Sparta nburg, SC 29303 M-F 9AM - 6PM • SAT 10AM - 3PM • SUNDAY HOME WITH THE FAMILY!
Directions: From Hearon Circle, Go Towards Downtown. Family Auto is 1/2 Mile on Right.
TO
Apply Online:
864-577-0728
YOUR BUDGET PAYMENTS
2 Year 36,000 Mile Warranty!
Not All Qualify - See Dealer For Details
0003514847
All Applications Will Be Accepted Down Payment Does Not Include Tax and Tag Fees
FIT YOUR BUDGET PAYMENTS
PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET P AYMENTS
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET P AYMENTS
FIT YOUR BUDGET PAYMENTS
TO
FIT YOUR BUDGET PAYMENTS
FIT YOUR BUDGET PAY AYMENTS A
FIT YOUR BUDGET PAYMENTS
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IWANNA® Refund Madness ~ January 24, 2012
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IWANNA® Refund Madness ~ January 24, 2012
iwanna.com
Protect Your Bank Accounts When Online
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arly last year, roughly 200,000 Citigroup credit card customers received some startling news. Hackers had accessed the gigantic bank’s system, a security breach that exposed account holder’s names, email addresses, and account numbers to hackers. News of the breach created a sense of panic among Citi’s customers. Despite the fact that customers’ social security numbers, dates of birth, card expiration dates, and card security codes were not compromised, the breach did leave those customers whose information was accessed susceptible to further fraud. Having names and matching sensitive information, such as email addresses and account numbers, enables hackers to potentially perpetuate mass fraud, leaving Citi customers at great risk. The Citi breach wasn’t the only breach to cause panic. Shortly before Citi revealed its security had been compromised, a banking breach at the People’s Federal Credit Union in Texas was victimized by hackers who used a software program to generate debit card numbers which they then used in other states that do not require PIN numbers to make a transaction. That breach left
many of the credit union’s customers with nothing in their accounts, though the credit union insisted the money would be replaced. In Australia, a security breach caused a handful of banks to cancel credit cards in an effort to protect customers. These incidents occurred within weeks of one another, leaving many account holders wary of online banking. While it’s safe to assume there will be future security breaches, that doesn’t mean banking customers should abandon online banking. But it may mean customers should take security more seriously. The following security measures are some of the ways men and women can protect themselves from criminals looking to access their information. • Be wary of junk emails. Junk e-mail is less prevalent than it once was, but that doesn’t mean it’s now harmless. In fact, hyperlinks within junk e-mails are one
Banking with a mobile device is one of the many trends hackers have begun to take advantage of, victimizing unsuspecting customers who use online banking apps that aren’t necessarily secure.
of the more common ways hackers gain access to private a information. Such links will likely take consumers to sites that look very similar to their bank’s website, and it’s there where consumers find themselves in deep trouble, entering personal information that they’re essentially handing over to criminals. Banks do not use email to contact their customers about account balances or other sensitive information. Even if the e-mail appears legitimate (and it likely will), do not click on the link within it. Instead, go directly to the institution’s website and login from there. • Protect mobile devices. Mobile devices are the same as computers and they need the same protection. More and more people bank through their mobile devices, but those people might be surprised to know mobile
banking apps are not always very secure. When downloading apps for your phone, always research their security before downloading, and always update the mobile device security software as frequently as possible. • Change passwords. It’s getting increasingly difficult to remember passwords. The more people go on-line, the more likely they are to be asked to create a username and password. Each is required for email accounts, online banking, accessing bills on-line, and just about anything else that involves sensitive information. While it can be difficult to keep track of all those usernames and passwords, it helps to change them frequently and to never use the same password for multiple accounts. It’s especially important to have a unique password for on-line bank-
ing. In addition, make answers to additional security questions something only you would know. For example, if asked for your high school’s mascot, say “meatloaf” or “hot dog” instead of the school’s actual mascot. Such answers are more likely to be known by you and you alone. • Monitor accounts online daily. In response to the Citi breach, many customers may have considered closing on-line accounts. However, such a measure makes it more difficult to monitor financial activity. Instead of eliminating accounts, people can monitor their online accounts on a daily basis. This makes it easier to customers to detect fraud and report it to their financial institution immediately.
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Traditional IRA vs. Roth IRA
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egardless of how much the economy struggles, men and women will always have an eye toward their retirements. Saving for retirement might be more difficult in a bad economy, but that doesn’t mean such saving should not remain high on an individual’s priority list. One of the more popular ways men and women save for retirement is via an IRA, or an Individual Retirement Account. Contrary to popular belief, an IRA is not an investment but essentially a savings account with considerable tax breaks. Unlike a 401(k), IRAs are commonly opened by individuals acting on their own and not through their company, though self-employed individuals and small business owners can open an IRA. When it comes to choosing an IRA, many people choose between a traditional IRA and a Roth IRA. For those unfamiliar with IRAs, there are differences between the two. What is a traditional IRA? A traditional IRA is a taxdeferred account, and account holders only pay taxes on their money when they make withdrawals in retirement. When taxes are deferred, all of the account’s dividends, interest payments, and capital gains are allowed to compound each year without being taxed. This allows the account to grow considerably faster than a taxable account. Most people can open a traditional IRA, but there is a qualification. An account holder or an account holder’s spouse must earn taxable income and be under the age of 70 1/2 to contribute to a traditional IRA. That’s the easy part. Determining if the contributions to a traditional IRA are tax deductible gets a little tricky. Much of this depends on an individual’s income and whether or not he or she is offered a 401(k) or other retirement plan at work. The guidelines that govern if contributions are tax deductible change from year to year, so people should familiarize themselves with these guidelines before opening an account. What is a Roth IRA? A Roth IRA allows money to grow tax-free. This is because a Roth IRA is funded with aftertax dollars that men and women have already paid taxes on. The benefit here is that the money
in a Roth IRA grows tax-free and, upon being withdrawn, no additional taxes are paid. Many men and women prefer a Roth IRA over a traditional IRA because the former is more flexible with regards to withdrawals. A Roth IRA allows account holders to withdraw their contributions penalty-free at any time for whatever reason they choose. However, account holders cannot withdraw investment earnings before age 59 1/2 unless the reason for the withdrawal is exempt. If not, account holders might have to pay a 10 percent tax penalty. Penalty-free withdrawals can be made for a number of reasons, including paying medical expenses greater than 7.5 percent of adjusted gross income, paying for a first-time home purchase and paying for costs of a sudden disability. Before opening a Roth IRA, individuals should familiarize themselves with all the rules and restrictions that apply, including which withdrawals are penaltyfree and which incur a penalty. Men and women who choose a Roth IRA can also continue making contributions after they have turned 70 1/2, whereas traditional IRA account holders cannot continue making contributions after the age of 70 1/2. What’s more, men and women who have a Roth IRA are not required to begin making withdrawals once they reach age 70 1/2 as they would be with a traditional IRA. Choosing between a traditional IRA and a Roth IRA depends on the individual and their income potential, specifically which tax bracket they expect to be in upon retirement. Money can be converted from a traditional IRA into a Roth IRA, but that money cannot be withdrawn for at least five years without incurring a penalty. Before making a decision, men and women should consider discussing their options with a financial advisor to ensure they make the best decision for them.
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IWANNA® Refund Madness ~ January 24, 2012
Tax Filing Deadline Pushed Back to April 17
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he Internal Revenue Service opened the 2012 tax filing season by announcing that taxpayers have until April 17 to file their tax returns. The IRS encourages taxpayers to e-file as it is the best way to ensure accurate tax returns and get faster refunds. The IRS also announced a number of improvements to help make this tax season easy for taxpayers. This includes new navigation features and helpful information on IRS.gov and a new pilot to allow taxpayers to use interactive video to get help with tax issues. “At the IRS, we’re working hard to make the process of filing your taxes as quick and easy as possible,” said IRS Commissioner Doug Shulman. “Providing quality service is one of our top priorities. It not only reduces the burden on taxpayers, but also helps in filing an accurate return right from the start.” Taxpayers will have until Tuesday, April 17, to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16. According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year. Taxpayers requesting an extension will have until October 15 to file their 2012 tax returns. The IRS expects to receive more than 144 million individual tax returns this year, with most of those being filed by the April 17 deadline. The IRS began accepting e-
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file and Free File returns on January 17. IRS Free File provides options for free brand-name tax software or on-line fillable forms plus free electronic filing. Everyone can use Free File to prepare a federal tax return. Taxpayers who make $57,000 or less can choose from approximately 20 commercial software providers. There’s no income limit for Free File Fillable Forms, the electronic version of IRS paper forms, which also includes free e-filing. The IRS also reminds paid tax return preparers they must have and include a Preparer Tax Identification Number (PTIN) on all returns they prepare. All PTINs must be renewed for 2011. Tax return preparers can obtain or renew PTINs on-line. The IRS continues to focus on taxpayer service. The best way for taxpayers to get answers to their questions is by visiting the IRS website at IRS. gov. The IRS has updated the front page of the IRS website to make it easier for taxpayers to get key forms, information, and file tax returns. The front page also has links to taxpayerfriendly videos on the IRS YouTube channel. More improvements are planned for IRS.gov in the months ahead. Last year, the IRS unveiled IRS2Go, its first smartphone application that lets taxpayers check on the status of their tax refund and obtain helpful tax
information. The IRS reminds Apple users that they can download the free IRS2Go application by visiting the Apple App Store and Android users can visit the Android Marketplace to download the free IRS2Go app. Individuals making $50,000 or less can use the Volunteer Income Tax Assistance program for free tax preparation and, in many cases, free electronic filing. Individuals age 60 and older can take advantage of free tax counseling and basic income tax preparation through Tax Counseling for the Elderly. Information on these programs can be found at IRS.gov. The IRS has begun a new pilot program where taxpayers can get assistance through two-way video conferencing. The IRS is conducting a limited roll out of this new video conferencing technology at 10 IRS offices and two other sites, and may expand to further sites in the future. A list of locations is available on IRS.gov. Once taxpayers file their federal return, they can track the status of their refunds by using the “Where’s My Refund?” tool, which taxpayers can get to using the IRS2Go phone app or from the front page of IRS. gov. By providing their Taxpayer Identification Numbers, filing status, and the exact whole dollar amount of their anticipated
Taxpayers will have until April 17 to file their federal tax returns for 2011. refund, taxpayers can generally get information about their refund 72 hours after the IRS acknowledges receipt of their e-filed returns, or three to four
weeks after mailing a paper return. Story courtesy of the Internal Revenue Service
4 ways to get IRS forms, publications
he Internal Revenue Service has free tax forms and publications on a wide variety of topics. Because of continued growth in electronic filing, the availability of free options to taxpayers and to reduce costs, the IRS discontinued the automatic mailing of paper tax packages last tax season. If you need IRS forms and publications, here are four easy methods for getting them: 1. On the Internet You can access forms and publications on the IRS website 24 hours a day, seven days a week, at irs.gov. 2. IRS Taxpayer Assistance Centers There are 401 TACs across the country where IRS offers
face-to-face assistance to taxpayers, and where taxpayers can pick up many IRS forms and publications. Visit irs.gov and go to Contact My Local Office on the Individuals page to find a list of TAC locations by state. On the Contact My Local Office page, you can also select
Office Locator and enter your zip code to find the IRS walk-in office nearest you as well as a list of the services available at specific offices. 3. At convenient locations in your community During the tax filing season, many libraries and post offices offer free tax forms to taxpay-
ers. Some libraries also have copies of commonly requested publications. Many large grocery stores, copy centers, and office supply stores have forms you can photocopy or print from a CD. 4. By mail You can call 1-800-TAX-
FORM (800-829-3676) Monday through Friday 7 a.m. to 7 p.m. local time — except Alaska and Hawaii which follow Pacific time — to order current year forms, instructions, and publications as well as prior year forms and instructions by mail. You will receive your order by mail, usually within 10 days.
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Homeowners Need to Know the Basics of Property Taxes
P
aying property taxes is a necessary side effect of home ownership. Across the United States and Canada, residents are required to pay property taxes based on an assessment of their homes’ value.
Taxes on land and the buildings on it are one of the biggest sources of revenue for local governments. In the United States, property taxes are not imposed by the states, but by the smaller governing bodies in cities, towns, townships, counties, and other jurisdictions. In Canada, property taxes, or milliage taxes, are levied by the jurisdiction in which the property is located. They may be paid to a federated state or a municipality or the national government. Sometimes multiple jurisdictions may tax the same property. Although the taxes are mandated by a higher governing power, the rate at which you pay taxes could be based on a very local assessment of the area in which your house is located and the current market conditions. An assessor will visit a home — usually prior to purchase — and
make a determination on the percentage of tax to be paid depending on the condition of the home, the improvements that have been made, and the climate of the economy in your particular town or city.
you for a limited assessed value on the property.
According to data from the Tax Foundation and Forbes, areas of New Jersey, New York, and Illinois boast some of the highest property taxes. Residents Property taxes are usu- of Hunterdon County, NJ, ally calculated by taking paid on average $8,600 a the assessed value of your year between 2005 and home and multiplying it by 2009. Those in Lake County, the tax rate that has been IL pay around $6,500. Peodetermined by your local ple living in Westchester County, NY, can plan on government. spending $8,400 per year. While no one can “legal- Statistics indicate that ly” escape paying property homes located in Ontario taxes, there are several cities in central Canada ways to have them low- have the highest property ered. Getting your home taxes. Toronto residents, re-assessed is one such for example, pay an averway. Individuals who have age of $3,900. reached a certain age may In this tough economy, be eligible for certain discounts on property taxes. lowering property taxes But this may require a (which are generally rolled very low income to qualify. into the mortgage amount There are also some tax for ease of payment) could credits or homestead ex- substantially reduce bills. emptions that may qualify As many as 60 percent of properties across the United States are overassessed, according to the National Taxpayers Union, a non-profit group that promotes lower taxes.
Homeowners need to know how their homes are taxed.
• An independent appraiser can also provide you accurate information at a cost. Make sure he or she is licensed with the National Association of Independent Fee Appraisers or by the American Society of If you suspect your prop- Appraisers. erty taxes are high, here are • It’s not possible to the steps to take: lower the property tax rate, • Get a copy of your just the assessed value of property tax assessment the home through an offifrom the local assessor’s cial appeal. There may be office and double-check all fees associated with this the information contained appeal, however. to see if it is correct. Some home improve• Check the assess- ments will increase the ments of five comparable value of your home and, in homes that have sold in turn, your property taxes. your neighborhood in the Here are some of the most last three years. common culprits:
- extra stories to the home - outhouses, like a guest house - sports courts, like tennis - installation of an inground pool - improvements to fencing - addition of a garage or another room on the home A change in the status of a neighborhood can also give rise to higher property taxes. An influx of new residents or new construction of stores and homes can have a major effect on the assessed value of your home.
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How to Recover from Holiday Credit Card Debt
T
he holidays can be a joyous time of the year. But shoppers who overspend on credit cards could find that come the next billing cycle, the magic of season’s greetings has lost its luster.
Industry analysts call it “debt hangover.” Overindulgence during the holidays can have a steep price come January 1. Although outstanding credit cards bills don’t make for the ideal situation once the holidays have come and gone, it is a situation from which a person can recover with due diligence. According to the American Bankers’ Association, the average household carries an $8,000 credit card balance. When a person pays with plastic, it can be difficult to visualize the money being spent. With cash, money
physically leaves a shop- finance charges. per’s hand. When the 2. Pay the card with the wallet is empty, the mon- highest interest rate first. ey is gone. 3. Pay more than just the minimum balance on A credit card does not the card. If possible, pay offer this tangible proof much more than the miniof spending. Therefore, mum payment so that people tend to overspend the interest isn’t the only when using plastic. Peo- thing being paid off. ple who have racked up 4. Try to negotiate beta high credit card bill will ter terms with the credit have to take a few steps card company to see if to get their finances in an interest rate can be recheck. Here’s how to be- duced. gin. 5. Consider consolidating multiple cards to one 1. Stop using the credit new card with a low introcard or cards. Additional ductory rate or a no-intercharges placed on the est rate. Then pay down, card will only cause bal- pay down, pay down. ances to rise and a per6. Return unused items son to accrue even higher to the store. Don’t pro-
There are several means beyond breaking the piggy bank that men and women can employ to alleviate holiday debt.
crastinate, especially if it means having a credit card balance reduced. 7. Track progress so that it will provide motivation to continue paying down the debt. 8. Learn from mistakes by starting to save for the next holiday season even earlier to reduce dependence on credit cards. 9. Use money in the bank to pay off debt. Banks generally pay much less on interest for a savings or checking account than a credit card
company charges in interest rates. Don’t carry a balance if there is money to pay it off. 10. Consider a second job or another way to make funds. Selling unused items on an on-line auction site or at a yard sale can free up some extra money to pay off debt. 11. Find ways to cut expenses in other places. However, don’t risk housing or family safety. Put that extra money toward credit card bills.
IWANNA® Refund Madness ~ January 24, 2012
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w w w. i r s . g o v / e f i l e
2012 IRS e-file Refund Cycle Chart Based on when your return was accepted by the IRS, the projected date your refund will be direct deposited or mailed is shown on the chart below. This date is based on normal processing and assumes your return does not require further review. If your return does require review and additional information is needed, you will receive a notice. For the most up-to-date information on your refund, go to www.irs.gov and click on Where’s My Refund? to check on any changes to the projected date shown below.
IRS accepts your return between…
Projected Direct Deposit Sent*
Projected Paper Check Mailed*
IRS accepts your return between…
Projected Direct Deposit Sent*
Projected Paper Check Mailed*
Jan 13 and Jan 19, 2012
Jan 26, 2012
Jan 30, 2012
Jul 6 and Jul 12, 2012
Jul 19, 2012
Jul 23, 2012
Jan 20 and Jan 26, 2012
Feb 2, 2012
Feb 6, 2012
Jul 13 and Jul 19, 2012
Jul 26, 2012
Jul 30, 2012
Jan 27 and Feb 2, 2012
Feb 9, 2012
Feb 13, 2012
Jul 20 and Jul 26, 2012
Aug 2, 2012
Aug 6, 2012
Feb 3 and Feb 9, 2012
Feb 16, 2012
Feb 20, 2012
Jul 27 and Aug 2, 2012
Aug 9, 2012
Aug 13, 2012
Feb 10 and Feb 16, 2012
Feb 23, 2012
Feb 27, 2012
Aug 3 and Aug 9, 2012
Aug 16, 2012
Aug 20, 2012
Feb 17 and Feb 23, 2012
Mar 1, 2012
Mar 5, 2012
Aug 10 and Aug 16, 2012
Aug 23, 2012
Aug 27, 2012
Feb 24 and Mar 1, 2012
Mar 8, 2012
Mar 12, 2012
Aug 17 and Aug 23, 2012
Aug 30, 2012
Sep 3, 2012
Mar 2 and Mar 8, 2012
Mar 15, 2012
Mar 19, 2012
Aug 24 and Aug 30, 2012
Sep 6, 2012
Sep 10, 2012
Mar 9 and Mar 15, 2012
Mar 22, 2012
Mar 26, 2012
Aug 31 and Sep 6, 2012
Sep 13, 2012
Sep 17, 2012
Mar 16 and Mar 22, 2012
Mar 29, 2012
Apr 2, 2012
Sep 7 and Sep 13, 2012
Sep 20, 2012
Sep 24, 2012
Mar 23 and Mar 29, 2012
Apr 5, 2012
Apr 9, 2012
Sep 14 and Sep 20, 2012
Sep 27, 2012
Oct 1, 2012
Mar 30 and Apr 5, 2012
Apr 12, 2012
Apr 16, 2012
Sep 21 and Sep 27, 2012
Oct 4, 2012
Oct 8, 2012
Apr 6 and Apr 12, 2012
Apr 19, 2012
Apr 23, 2012
Sep 28 and Oct 4, 2012
Oct 11, 2012
Oct 15, 2012
Apr 13 and Apr 19, 2012
Apr 26, 2012
Apr 30, 2012
Oct 5 and Oct 11, 2012
Oct 18, 2012
Oct 22, 2012
Apr 20 and Apr 26, 2012
May 3, 2012
May 7, 2012
Oct 12 and Oct 18, 2012
Oct 25, 2012
Oct 29, 2012
Apr 27 and May 3, 2012
May 10, 2012
May 14, 2012
Oct 19 and Oct 25, 2012
Nov 1, 2012
Nov 5, 2012
May 4 and May 10, 2012
May 17, 2012
May 21, 2012
Oct 26 and Nov 1, 2012
Nov 8, 2012
Nov 12, 2012
May 11 and May 17, 2012
May 24, 2012
May 28, 2012
Nov 2 and Nov 8, 2012
Nov 15, 2012
Nov 19, 2012
May 18 and May 24, 2012
May 31, 2012
Jun 4, 2012
Nov 9 and Nov 15, 2012
Nov 22, 2012
Nov 26, 2012
May 25 and May 31, 2012
Jun 7, 2012
Jun 11, 2012
Nov 16 and Nov 22, 2012
Nov 30, 2012
Dec 4, 2012
Jun 1 and Jun 7, 2012
Jun 14, 2012
Jun 18, 2012
Nov 23 and Nov 29, 2012
Dec 6, 2012
Dec 10, 2012
Jun 8 and Jun 14, 2012
Jun 21, 2012
Jun 25, 2012
Nov 30 and Dec 6, 2012
Dec 13, 2012
Dec 17, 2012
Jun 15 and Jun 21, 2012
Jun 28, 2012
Jul 2, 2012
Dec 7 and Dec 13, 2012
Dec 20, 2012
Dec 24, 2012
Jun 22 and Jun 28, 2012
Jul 5, 2012
Jul 9, 2012
Dec 14 and Dec 20, 2012
Dec 28, 2012
Jan 2, 2013
Jun 29 and Jul 5, 2012
Jul 12, 2012
Jul 16, 2012
Dec 21 and Dec 27, 2012
Jan 4, 2013
Jan 8, 2013
Refund Inquiries You can check the status of your refund 72 hours after IRS acknowledges receipt of your e-filed return. For the fastest information go to www.irs.gov and click on Or, call 1-800-829-1954 or 1-800-829-4477.
Publication 2043 EN/SP ( Rev. 04-2011) Catalog Number 24452M Department of the Treasury Internal Revenue Service www.irs.gov
* This is the projected date that the refund will be direct deposited or mailed. It may take up to 5 additional days for the financial institution to post the refund to your account, or for mail delivery.
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Refund Madness January 24, 2012
IRS Releases Revised Tax Guide T
axpayers can get the most out of various recovery tax benefits and get a jump on preparing their 2011 federal income tax returns by consulting a newly revised comprehensive tax guide now available on IRS.gov.
Publication 17, Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American opportunity credit for parents and college students, and the child tax credit and expanded earned income tax credit for low- and moderate-
income workers. This useful 303-page guide also provides more than 5,000 interactive links to help taxpayers quickly get answers to their questions. Publication 17 has been published annually by the IRS since the 1940s and has been available on the IRS website since 1996. As
in prior years, this publication is packed with basic tax-filing information and tips on what income to report and how to report it, figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions and using IRAs to save for retirement.
Besides Publication 17, IRS.gov offers many other helpful resources for those doing year-end tax planning. Many 2011 forms are already posted, and updated versions of other forms, instructions, and publications are being posted almost every day. Forms already available include Form 1040,
short Forms 1040A and 1040EZ, Schedule A for itemizing deductions and new Form 8949 for reporting sales of stocks, bonds, and other capital assets. Story courtesy of the Internal Revenue Service
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Finding a Financial Planner You Can Trust
T
ihe up-and-down nature of the economy over the last several years has forced many people to re-examine their finances. Uncertainty reigns with regards to the market, and investors have begun to rely more heavily on financial planners to help them make sense of an unpredictable financial landscape. For those who have never worked with a financial planner before, finding the right fit can be difficult if not intimidating. Few have forgotten the likes of Bernie Madoff or the handful of so-called “mini Madoffs.” These people appeared to be trustworthy financial advisors or investment gurus only to be revealed as Ponzi schemers and white collar criminals when the world’s financial markets started to collapse. With such schemers still fresh on the minds of prospective investors, it’s understandable to approach hiring a financial advisor with uncertainty. But for every Bernie Madoff or R. Allen Stanford, there are many more trustworthy financial planners who truly want to help their clients grow their wealth and meet their financial goals.
can assess every aspect of your finances -- be it savings, investments, taxes, retirement, etc. -- and help devise an effective plan to meet your financial goals. Other financial planners can only recommend their clients invest in a narrow range of products. When interviewing prospective planners, always ask what they can and cannot do. Investors often prefer a financial planner who can help with all aspects of their finances and not those whose scope is rather limited.
Certifications vary Some people who call themselves financial planners are not necessarily more qualified than the people for whom they’re working. Certifications vary, so always ask a planner to produce proof of his or her certifications. Certain credentials, including a CFP(R), or CertiWhen beginning the fied Financial Planner, or process of finding a fi- a CFA (Certified Financial nancial planner, investors Analyst) are more commust take their time and mon than others, but, in exercise due diligence the United States, finanwhen vetting prospective cial planners who proplanners. There are also a vide their clients with few things men and wom- investment advice must en must know about the register with the Securibusiness before the pro- ties and Exchange Commission (www.sec.gov). cess begins. In Canada, the country’s Anyone can refer to federal Department of himself as a financial Finance (www.fin.gc.ca) supervises the regulation planner. Financial planner is a of financial institutions rather broad term applied and investment dealers. to a group of people who Once a financial planner provide a varying degree claims certfication, men of service. Some planners and women should con-
Your financial planner should be one you can trust, and also one who can easily answer all your questions.
tact the above agencies in their respective countries to verify that certification. This might not be easy and will likely take some time, but it’s well worth it before just handing money over to a stranger.
Madoff’s victims knew each other), but it might help quell some of the fear associated with hiring a financial planner. Another way to get references is to simply ask the planner for two or more of his clients and contact them Once you have done with any questions. your homework and investigated prospective Fees financial planners, verifyAsk the planner how ing their backgrounds and he or she gets paid. Feethat their certifications are only planners don’t work current and they are in on commission, but earn good standing with pro- their money for the advice fessional organizations they provide. Fee-based and regulatory bodies, planners might get some there are additional things commissions for certain to consider before making products, but the bulk of a final decision. their earnings will come from the fee their clients References pay. A planner whose Ask friends or fam- earnings are commissionily members if they can based is paid by the comrecommend any financial panies whose products he planners. Granted, this or she sells. Fees can vary isn’t foolproof (many of from very cheap to expen-
sive, but this also depends on the services the client needs. Don’t base the decision on a preconceived dislike of commissions or what planner charges the lowest fees. The goal is to get the best service possible, and if that costs a little extra, it may be worth it. But don’t automatically associate high fees with better performance or competent advice, either. Control A financial planner is there to provide advice and assistance, but the client ultimately has the final say. Find a planner who recognizes the client is the one in control and respects a client’s opinions and concerns. Anything short of that is likely going to become a difficult and possibly disastrous relationship.
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Don’t Forget Finances When Making Resolutions
W
hen the time comes to make New Year’s resolutions, the conventional wisdom is to focus on weight. Such wisdom is understandable, as many people spend the holiday season indulging in big meals and all the treats synonymous with having fun. While it’s acceptable to make healthy resolutions, a slimmer waist and a healthier diet should not be the only goals for the year ahead. In light of the last several years, it’s important for men and women to make financial resolutions for the year ahead, too. No one can say with certainty when, or if, the economy will rebound, and men and women should look at the New Year as a suitable time to make some financial resolutions for the future. Reassess your investment plan. Since 2008, the market has been up and down like a roller coaster. Those who have weathered the storm have no doubt witnessed big gains and significant losses over the last few years, and the turn of the calendar is a great time to reassess investments and possibly make some changes. Are you taking on more risk than you’re
comfortable with? Is your portfolio too conservative? How well are you diversifying? Look at your investments from every angle and determine if it’s time to make some changes. Resolve to be more liquid. A 2011 poll from the National Foundation for Credit Counseling found that 64 percent of Americans would need to utilize a source other than their savings account to pay for a $1,000 unplanned expense. That percentage illustrates that most adults just don’t have enough cash on hand. This year, resolve to be more liquid. Being more liquid enables you to more effectively handle emergencies, and it also helps you avoid being forced to sell investments at the wrong time. Shake things up. If you rely on one individual to handle all of your financial
This year, don’t forget to make financial resolutions, including having more cash at your disposal to better handle emergencies.
needs, such a practice needs to change. No matter how
much you trust this person, don’t fall into a trap where one person acts as your financial expert. Such an arrangement proved very costly to those men and women who trusted the likes of Bernie Madoff, a once-prominent financier who turned out to be nothing more than a criminal mastermind orchestrating history’s largest Ponzi scheme. This year, if you haven’t done so already, make sure your financial advisor, money manager, custodian, and trustee are all different people. Negotiate lower rates. Use the onset of the New Year as a chance to negotiate newer and lower interest rates on existing loans or credit cards. If you have exercised financial responsibility over the last 12 months, paying down debts and paying all bills on time, this is the perfect time to negotiate lower rates and reap the rewards of your good behavior.
Don’t invest in anything you don’t understand. Too often investors get caught up in so-called expert forecasts and act impulsively based on the advice of some talking head they see on television or hear on the radio. Unfortunately, such “experts” aren’t always certified financial professionals, and some might even have ulterior motives for pushing certain investments and shunning others. What’s more, few people know the track record of these “experts,” so their advice should not be taken at face value. A simple rule for the year ahead should be to never invest in anything you don’t understand. If an investment opportunity seems worthwhile, do all of your homework to gain a solid understanding of the opportunity before investing any money. Healthy resolutions go beyond a slimmer waist and a healthier diet. This year, resolve to get healthier financially as well.
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Payroll Tax Cut Temporarily Extended into 2012
N
early 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011.
The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through February 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits. Employers should implement the new payroll tax rate as soon as possible in 2012 but no later than January 31, 2012. For any Social Security tax over-withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but no later than March 31, 2012. Employers and payroll companies will handle the withholding changes, so workers should not
need to take any additional action. Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the fullyear amount). This provision imposes an additional income tax on these higherincome employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100). This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or de-
ductions. The recapture tax would be payable in 2013, when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision. The IRS will issue additional guidance as needed to implement the provisions of this new twomonth extension, including revised employment tax forms and instructions and information for employees who may be subject to the new “recapture” provision. For most employers, the quarterly employment tax return for the quarter ending March 31, 2012 is due April 30, 2012. Story courtesy of the Internal Revenue Service
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Investment and Retirement Glossary
inancial jargon can make the process of getting one’s finances in order and making smart economic decisions a bit of a challenge. To the average person, figuring out terminology can be a stumbling block and a hassle some want to avoid! However, it’s important to know some of the lingo associated with financial planning to ensure money is being saved and spent in a responsible way. Here are some definitions of commonly used words and phrases everyone should know! 401(k): In the United States, a retirement plan where money is diverted
into an account and then invested. Current income tax is deferred until the money is withdrawn upon maturity. Amortization schedule: A comprehensive schedule of payments determining the breakdown of the mortgage amount, interest, principle received, and balance due through each period of the loan until the loan balance reaches zero.
Annuity: A stream of fixed payments that is generally paid as part of a life insurance policy or retirement fund. Appraisal: An estimated value of property used most often in real estate transactions. Bankruptcy: A legally declared inability of an individual or organization to pay their creditors.
Dividend: A portion of a company’s profit paid to common and preferred shareholders. The dividend is paid in a fixed amount for each share of stock held, whether in cash or more stock.
Interest: Fees paid on borrowed assets.
IRA: Individual Retirement Accounts were initially set up in 1974 to provide a retirement option for individuals who were not covered by an employer-sponHedge fund: An aggres- sored plan. Eventually it was sive investment fund gener- opened up so anyone under ally open to a limited num- the age of 70 could donate ber of investors. up to a certain amount of income a year.
NEELEY’S
Liquidity: The ability to turn assets into cash without losing a lot of value. Longevity risk: The risk a pension fund or life insurance company takes on when offering its plans, due to the increasing life expectancy rate. Pension: A deferred compensation scenario by where an employer pays an employee a portion of income based upon length of service and employee age. Some pensions can be contributed to by the employee himself, with the employer matching the contribution.
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*Offer valid 1/1/12 – 3/31/12 at participating U.S. dealers to U.S. residents on new and unused 2008, 2009, 2010, 2011 and 2012 Arctic Cat ATVs, excluding Demo and Special Services models. See dealer for details. 6.9% Financing for 60 months and NO MONEY DOWN, NO INTEREST, NO PAYMENTS UNTIL SEPTEMBER 1, 2012 financed through Sheffield Financial and is subject to credit approval; not all applicants will qualify for credit. Each consumer will be charged a $100 Consumer document fee. Financing promotions void where prohibited. REBATES UP TO $1,000 valid on 2008-2012 models and varies by model purchased. Offer subject to change without notice. Excludes tax, freight and dealer setup. ATVs can be hazar dous to operate. For your safety always wear an approved helmet, eye protection, and protective clothing. Never ride on paved surfaces or public roads. Never engage in stunt driving; riding and alcohol/drugs don’t mix and could cause serious injury or even death. Avoid excessive speeds and be particularly careful on difficult terrain. Arctic Cat recommends that all riders read and understand their operator’s manual before operation. Along with concerned conservationists everywhere, Arctic Cat urges you to “Tread Lightly” on public and private lands. Ride only on designated areas or trails. Preserve your future riding opportunities by showing respect for the environment, local laws, and the rights of others when riding. Never carry a passenger on a single-rider ATV. Only ride an ATV that is right for your age. Supervise riders younger than 16. ATVs are only recommended for users over 12 years old. Arctic Cat recommends that all riders take a training course. For safety or training information in the U.S., call the ATV Safety Institute at (800) 887-2887 or see your dealer. Do not shoot from or lean firearms or bows against the ATV. ®™ are trademarks or registered trademarks of Arctic Cat Inc. ©2012. Arctic Cat Sales Inc., Thief River Falls, MN 56701. Arctic Cat ATVs and Side by Sides are world-class products from Arctic Cat Inc.
NOTES:
Prime Rate: A term applied in many countries to a reference interest rate used by banks. 0003514838
NO
MONEY DOWN INTEREST PAYMENTS UNTIL SEPTEMBER 1, 2012
Principal: The original amount of debt on which interest is calculated. Rollover: This term is used for moving a retirement plan into a different one, generally when leaving a job. Usually there is a set time period in which the rollover must occur so that a penalty isn’t issued.
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Is work costing you money?
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aking up five days a week and going to work is how most people stay afloat financially. Without a steady paycheck, the majority of people would not be able to sustain their lifestyles.
But even if working is on your table, it could be essential to keeping a roof costing you more money over your head and food than you realize. The fol-
lowing are some of the nances and some pos- Working parents who can ways that work could be sible ways to reduce that work from home, even if burdensome on your fi- burden. it’s only a couple of days per week, can save a subLocation stantial amount of monThe location of your ey. office could be putting a significant dent into your Food finances. If you work far Men and women who away from home, the work in densely populated high cost metroof fuel is politan no doubt areas very taxmight ing on have nufinances. merous The Cenoptions ter for at their Housing disposPolicy, a als when nonprofit it comes research t i m e affiliate to eat of the lunch. National But eatHousing ing lunch C o n f e rout eve n c e , ery day n o t e s Eating out every day can cost more than c a n you think. that more prove than 85 v e r y percent of low- to moder- expensive over time. If ate-income workers drive lunch costs roughly $10 to work in private vehicles. per day, five days a week, Instead of taking your own that translates to roughly car to work, consider pub- $200 per month for lunch, lic transportation. Such an which is more than $2,000 option is likely to cost as per year. Instead of buymuch as $100 per month, ing lunch out every day, but that figure pales in brown bag it and you’re comparison to monthly likely to save a considerfuel costs for men and able amount of money women whose offices are over the course of the a considerable distance year. from their homes. Attire Childcare If you must travel a lot Few costs are as con- for work or host clients on siderable for working par- a regular basis, chances ents as childcare. In big are your wardrobe needs cities, childcare costs are to stay current, which can significant, while smaller prove costly. If that’s the cities tend to offer more case, consult your emaffordable childcare op- ployer about a possible tions. But regardless of clothing allowance to where you live, the cost lessen the blow of looking of childcare is going to be so good. a big part of your budget.
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IWANNA® Refund Madness ~ January 24, 2012
Funding Your Next Improvement
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aintenance is an inevitable part of home ownership. Beyond routine fixes, many homeowners aspire toward larger projects such as room expansion or a new roof or siding. Funding for these projects may a loan from the bank.
Home equity loans are common ways to pay for home improvements.
amount of ownership value a homeowner has in a property. It is calculated by subtracting the unpaid mortgage balance and other debts on the home from the property’s fair market value. It’s important to note that some home values decrease during times of economic downturn. Therefore, homeowners should do their homework prior to starting any improvements to determine if a home eqA home equity loan is uity loan is a good idea. also known as a second mortgage. HomeownThere are two main types ers borrow money by le- of home equity loans: A veraging the equity in fixed-rate loan or a home their homes. Equity is the equity line of credit. A home equity loan or line of credit are common ways to pay for home renovations. A home equity loan can be used for a number of things, including paying education expenses or buying luxury items. Oftentimes, a homeowner chooses to borrow against the equity in the homes to make improvements that will increase the value of the property.
With a fixed-rate loan, a lump sum is provided to the homeowner, which is then repaid over a set period of time with a fixed interest rate that is agreed upon by the lender and the lendee. The payment and interest rate remain the same for the life of the loan. When homeowners choose a home equity line of credit, or HELOC, it is like they are using a credit card linked to their home’s value. Borrowers are preapproved for a set amount against which they can borrow. Monthly payments may vary, and the interest rate is based on the cur-
rent interest rate, meaning loan to make a home imit can fluctuate. provement should be done carefully. Financial experts Home equity loans typi- say that the loan should cally offer interest rates only be taken if the renothat are lower than those vation will add value to the linked to credit cards or of- home. Cosmetic changes fered with other types of and personal additions, loans. The interest paid on such as a swimming pool, these loans also may be may not justify the cost of tax-deductible. Home equi- the loan. ty loans are a good choice Individuals can talk with for responsible homeowners who have the means to a personal savings bank, repay the loan. They can be the company that holds a pitfall for borrowers who their mortgage, a credit overspend and need cre- union, or another financial ative financing methods to institution to determine if a home equity loan is the pay off outstanding debt. right choice in this current Using a home equity market.
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IWANNA® Refund Madness ~ January 24, 2012
Starting Now to Save for Childrens’ College Funds
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S
etting goals is often the first step to achieving your hopes and dreams for yourself and your family. Making a plan, however, is crucial to making those dreams a reality. This is especially true when it comes to a college education for your children. Starting a college savings plan when your children are young sets you on a path for success and can help you reduce the need for expensive student loans down the road. investment research, rates the various plans and is one of many resources to consult when selecting a 529 plan. Others include SavingForCollege.com and CollegeSavings.org.
Establishing a college savings plan early and contributing to it often is the key to reducing, or even eliminating, student loan debt. According to the Project on Student Loan Debt, the average student-loan debt increased 24 percent to $23,200 in 2008, up from $18,650 in 2004.
and more than 40 states recognize September as National College Savings Month, an important reminder to parents, grandparents, friends, and family members that they can do do something about the amount of student loan debt their children acquire.
According to FinAid. In an effort to raise org, parents who put awareness about the aside just $50 per month need to save for educa- from the time their child is tional expenses, the Col- born can grow a nest egg lege Savings Plan Network of more than $20,000 by
the time that child turns 18, assuming a 7 percent return on investment. Increasing those contributions to $100 per month can yield more than $43,000. While there are a number of college savings vehicles to choose from, savers should keep in mind that a 529 plan is a tax-free and, in some cases, state tax-deductible college savings option. Operated by a state or educational institution, a
An example of a toprated Morningstar 529 plan is CollegeAdvantage, Ohio’s college savings plan managed by Ohio Tuition Trust Authority. Account owners can contribute to a CollegeAdvantage account for as little as $25 and accounts are available to any U.S. resident. Investing just $25 per month in a CollegeAdvantage account with a 6 percent interest rate will result in nearly $9,000 in college savings after 18 years. CollegeAdvantage funds can be used at any college in the country to pay for tuition, fees, room and board as well as books. For more information about CollegeAdvantage, or to start saving with Ohio’s 529 plan 529 plan is an education today, visit collegeadvansavings plan designed to tage.com. provide families with an easy way to save. Most “Saving with a 529 plan offer on-line enrollment offers parents, friends, with minimal initial invest- and family members an ment, as low as $25. Ad- affordable and attainditionally, contributions able way to save for their can be made by more loved one’s future college than just a child’s parents. expenses,” said Richard Anyone can contribute to Norman, interim execuan account or open one tive director of Ohio Tuon behalf of a child. ition Trust Authority. “With a minimal investment of Many states offer a 529 $25, individuals can open plan and each state’s plan a CollegeAdvantage acis different. Morningstar, count and begin saving a leading provider of immediately.”
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IWANNA速 Refund Madness ~ January 24, 2012
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IWANNA® Refund Madness ~ January 24, 2012
Planning Ahead is Key to Smooth Tax Returns
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ax season is here, which can be good news or bad news depending on the individual. For those accustomed to getting a tax return, that annual financial windfall is welcomed with open arms. On the other hand, those used to a tax bill every April are far less enthusiastic when tax time rolls around. ed to avoid any unneces- of documents can be insary delays. timidating. What’s more, the Internal Revenue SerFor those men and vice website can be diffiwomen who will be enlist- cult to navigate for those ing a professional to pre- who have not visited it in pare their return, bring all the past. of this information to the meeting. Tax season is esNo document is more pecially busy for accoun- necessary than a W-2, tants and tax prep pro- which employers must Personal Items fessionals, so it might be provide by the end of JanTo file a tax return, in- difficult to secure another uary. Men and women will dividuals will need their appointment should you get one from each of their own Social Security num- forget to bring all of the employers, so those who work multiple jobs, even ber, as well as that of any- necessary information. part-time jobs, will need one else they might be a W-2 for each job they’ve Income Documents helping or listing on their It’s easy to get con- worked in the past 12 own return. This includes a spouse and any depen- fused when attempting to months. Additional docudents. If preparing some- file a tax return. For men ments that can be necone else’s tax return, be and women who visit the essary might pertain to sure to inform them this local library for their filing investment income, busiinformation will be need- information, that table full ness or farming income, With tax season on the horizon once again, it’s time to start preparing to file a return. The following guide can help individuals get their tax materials in order, whether they’re filing themselves or enlisting the help of a tax professional.
alimony received, and forms for state and local income tax refunds. A good rule of thumb to avoid getting lost in the documents is to start as early as possible the Avoid the stress of tax time by preparing more extendocuments well in advance of April 17. sive or complicated the employment and income deny homebuyer credits. history may be. For example, men and women with • IRA contributions: one job and no outside A year-end account sumincome should be able to mary or bank statement file quickly and easily. The is often all that’s needed. more extensive a person’s investment portfolio or the • Green energy credmore jobs a person has, its. Among the items the more difficult it will potentially eligible for likely be to file the return. residential energy credits So start early if things are are insulation, energy efcomplicated. ficient exterior windows, energy efficient HVAC Credits appliances, and solar hot The government gives water heaters. Of course, men and women all sorts receipts will be necesof credits that reduce the sary for those attempting amount of the income to earn a credit for any of taxed. These include these items. homebuyer credits, IRA contributions, green ener• Student loan intergy credits, or student loan est: A year-end loan stateinterest. ment should be received sometime in January. Tax credits include: Getting organized well • Homebuyer credits: A ahead of the tax deadline properly executed settle- will make things go much ment statement must be smoother, whether you attached to a return, and owe on your taxes or are men and women should getting a refund. keep in mind the IRS now has greater authority to
IWANNA® Refund Madness ~ January 24, 2012
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NASCAR 12
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IWANNA® Refund Madness ~ January 24, 2012
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