Tax Time Savings 2014

THE UPSTATE’S 2014

JANUARY 28, 2014

Tax Time Savings

Are You ✓

Prepared

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for Tax Time

✓Reducing Your

MONTHLY EXPENSES Easy Tax Planning for a

✓BIGGER REFUND Find FREE ✓Tax Preparation Near You

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IWANNA® TAX TIME SAVINGS --- January 28, 2014

New Opening Date For 2014 Tax Season

The Internal Revenue Service has announced plans to open the 2014 filing season on January 31 and encouraged taxpayers to use e-file or Free File as the fastest way to receive their refunds.

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he new opening date for individuals to file their 2013 tax returns will allow the IRS adequate time to program and test its tax processing systems. The annual process for updating IRS systems saw significant delays in October following the 16-day federal government closure.

“Our teams have been working hard throughout the fall to prepare for the upcoming tax season,” IRS Acting Commissioner Danny Werfel said. “The late January opening gives us enough time to get things right with our programming, testing and systems validation. It’s a complex process, and our bottomline goal is to provide a smooth filing and refund process for the nation’s taxpayers.”

The government closure meant the IRS had to change the original opening date from Jan. 21 to Jan. 31, 2014. The 2014 date is one day later than the 2013 filing season opening, which started on Jan. 30, 2013, following January tax law changes made by Congress on Jan. 1 under the American Taxpayer Relief Act (ATRA). The extensive

set of ATRA tax changes affected many 2012 tax returns, which led to the late January opening.

The IRS noted that several options are available to help taxpayers prepare for the 2014 tax season and get their refunds as easily as possible. New year-end tax planning information has been added to IRS.gov this week.

In addition, many software companies are expected to begin accepting tax returns in January and hold those returns until the IRS systems open on Jan. 31.

More details will be available in January.

The IRS cautioned that it will not process any tax returns before Jan. 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.

The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request

The October government closure affected about 90% of IRS operations, causing a delay for the 2014 season.

an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

IRS systems, applications and databases must be updated annually to reflect tax law updates, business process changes and programming updates in time for the start of the filing season.

The October closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core

systems is a complex, year-round process with the majority of the work beginning in the fall of each year.

About 90 percent of IRS operations were closed during the shutdown, with some major work streams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season. There are additional training, programming and testing demands on IRS systems this year in order to provide additional refund fraud and identity theft detection and prevention.

-For more information visit irs.gov

FUN FACTS

ABOUT TAXES?

Blueberries from Maine are subject to specific tax too, anyone who grows, purchases, sells, handles, or processes blueberries in Maine has to pay a penny and a half tax per pound.

There are over 7 million words in the tax law and regulations. That beats the Gettysburg address, the Declaration of Independence, and the Holy Bible all rolled into one (269+1,337+773k).

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Find FREE Tax Preparation Near You FREE tax help is closer than you think, probably right in your neighborhood. IRS-sponsored tax preparation programs can help you complete and electronically file your tax return for free, and will share information about tax credits and deductions for which you may qualify.

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he IRS Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $52,000 or less.

The Tax Counseling for the Elderly (TCE) program offers free tax assistance for all with priority assistance to people who are 60 years of age and older, specializing in questions about pensions and retirement issues unique to seniors.

At select tax sites, you have an option to prepare your own free basic federal and state tax return using Web-based tax preparation software this year. This is helpful if you do not want to wait in line or need a little help to get started or do not have access to a computer or the internet.

There are IRS-certified volunteers at all VITA and TCE sites who are trained in basic tax law.

Many locations have volunteers who speak other languages and can assist those who have difficulty communicating in English.

Volunteers are also available to help visitors complete and file their own returns.

In addition to free tax return preparation assistance, VITA and TCE sites provide free electronic filing.

The IRS has partnerships with many nonprofit groups, government agencies and organizations that host tax preparation sites in local communities. With thousands of these sites throughout the nation, there is a very good chance there’s one conveniently located near you.

As a supplement to the traditional face-to-face approach for return preparation, some IRS partners have leveraged the power of technology to provide increased

access to free tax preparation for individuals and families. Known as Virtual VITA/TCE, this program uses video chat software and secure file sharing technology to connect taxpayers and volunteer preparers in different geographic locations. Partners establish a convenient location for you to complete the required paperwork (including a consent form outlining the process). Your information is then securely transmitted (by scanner, fax, etc.) to an IRS-certified volunteer at another location to complete the return. To guide you through the return preparation process, you’ll be able to communicate “virtually” with the preparer using video chat software or other technology provided by the sites.

So, how do you find these free help sites? The locations and hours of operation of sites near you can be found once tax filing season begins using the VITA locator tool on www.IRS.gov and on the IRS2Go mobile application. The VITA/TCE sites will begin to appear on the locator tool approximately three weeks before they are scheduled to open. Most

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Why wait to prepare and file your federal taxes? IRS-certified volunteers can do it now for free.

sites open around the end of January. You can typically find locations and hours for these volunteer tax preparation sites through city and local community organization hotlines. You can also call the IRS toll-free at 1-800-906-9887.

A majority of the TCE sites are operated by the AARP Foundation’s Tax Aide Program. To locate the nearest TCE site or AARP

Tax-Aide site, use the AARP Site Locator Tool at www.aarp.org or call 888-227-7669.

FREE tax help is closer than you think, and finding it just a matter of a few easy clicks.

Please share information about these programs and how to find a site with your neighbors, family and friends who may qualify for this service.

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Tax Tips For Newlyweds Late spring and early summer are popular times for weddings. Whatever the season, a change in your marital status can affect your taxes. Here are several tips from the IRS for newlyweds. n It’s important that the names and Social Security numbers that you put on your tax return match your Social Security Administration records. If you’ve changed your name, report the change to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get this form on their website at SSA. gov, by calling 800-772-1213 or by visiting your local SSA office. n If your address has changed, file Form 8822, Change of Address to notify the IRS. You should also notify the U.S. Postal Service if your address has changed. You can ask to have your mail forwarded online at USPS.com or report the change at your local post office.

n If you work, report your name or address change to your employer. This will help to ensure that you receive your Form W-2, Wage and Tax Statement, after the end of the year. n If you and your spouse both work, you should check the amount of federal income tax withheld from your pay. Your combined incomes may move you into a higher tax bracket. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4, Employee’s Withholding Allowance Certificate.

See Publication 505, Tax Withholding and Estimated Tax, for more information. n If you didn’t qualify to

Entering a new stage of life can also mean entering a new tax bracket.

itemize deductions before you were married, that may have changed. You and your spouse may save money by itemizing rather than taking the standard deduction on your tax return.

You’ll need to use Form 1040 with Schedule A, Itemized Deductions.

You can’t use Form 1040A or 1040EZ when you itemize. n If you are married as of Dec.

31, that’s your marital status for the entire year for tax purposes.

You and your spouse usually may choose to file your federal income tax return either jointly or separately in any given year. You may want to figure the tax both ways to determine which filing status results in the lowest tax. In most cases, it’s beneficial to file jointly.

-For more information about

these topics, visit IRS.gov. You can also get IRS forms and publications at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

DID YOU KNOW?

The first e-file (electronic transmission) of a tax return took place on January 24, 1986.

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How To Prepare For Tax Time

Although some are ready to say their fond farewells to 2013, thought needs to be given to the 12 months that just passed as tax-filing season approaches.

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ax season is a few months away, but it’s never too soon to begin preparations for filing income taxes. Some people prefer to toast the new year and then arrange appointments with their accountants, while others use the new year as an opportunity to get organized and start compiling paperwork and tax questions. Preparing for tax time at the dawn of a new year can make the process go more smoothly in the months ahead.

Here are some tips on how to prepare for the upcoming tax season. n Start a documents folder. Employers, charitable organizations, banks and other financial institutions begin mailing out tax forms from the previous year in early January. Individuals should keep their eyes open for any mail that appears to be tax-related. Store these documents in a folder that can protect any sensitive information. Such folders also make information more accessible as more and more documents arrive in the mail. n Begin collecting receipts and itemizing expenses. Many expenses are tax-deductible. These can include education costs, moving expenses, home improvements, medical expenses, charitable donations and childcare costs. Store receipts and other documentation,

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including canceled checks, with the other tax documents. These will come in handy should an audit ever be ordered. n Create a spreadsheet of important information. It is handy to have all financial information at the ready. Some accountants will lower their fees if people do some of the filing preparation work themselves. This can include creating a profit/loss statement on investments, or working up a tally of charitable donations. Make an itemized list of all pertinent information so it will be handy when tax-filing time arrives. n Decide on a filing option. Technology has made filing taxes much easier. Tax preparation software is available for those who choose to file their taxes themselves. There also are walk-in centers that will prepare tax-filing documents.

Individuals also can visit a certified public accountant. Whatever method taxpayers choose, allow for ample time to gather information and get the taxes filed by the deadline. Leave some wiggle room in case one filing method doesn’t work out. n Start saving money. Although the goal is to get a refund each and every year, taxpayers sometimes owe money, which can be troublesome for men and women

whose budgets are stretched thin already. Those who owed money in the past should begin saving money for tax expenses as early as possible. n Develop a good filing system.

Many financial professionals will advise people to keep financial records for 7 years. Any tax documents should be kept together

should they need to be referenced or if an audit is ordered. Designate a filing cabinet or a box specifically for tax documents.

Tax filing season is right around the corner, and the dawn of a new year is a great time for men and women to start gathering documents and preparing their returns.

-Metro Creative Connection

FUN FACTS ABOUT TAXES?

The IRS sends out 8 billion pages of forms and instructions each year? If you laid all of this paper out, end to end, the trail would stretch around the Earth 28 times!

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IRS Warns Of Pervasive Telephone Scam The Internal Revenue Service today warned consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country.

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ictims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.

“This scam has hit taxpayers in nearly every state in the country.

We want to educate taxpayers so they can help protect themselves.

Rest assured, we do not and will not ask for credit card numbers over the phone, nor request a prepaid debit card or wire transfer,” says IRS Acting Commissioner Danny Werfel. “If someone unexpectedly calls claiming to be from the IRS and threatens police arrest, deportation or license revocation if you don’t pay immediately, that is a sign that it really isn’t the IRS calling.” Werfel noted that the first IRS contact with taxpayers on a tax issue is likely to occur via mail Other characteristics of this scam include: n Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves. n Scammers may be able to recite the last four digits of a vic-

tim’s Social Security Number. n Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling. n Scammers sometimes send bogus IRS emails to some victims to support their bogus calls. n Victims hear background noise of other calls being conducted to mimic a call site. n After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do: n If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040.

The IRS employees at that line can help you with a payment issue – if there really is such an issue. n If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484. n If you’ve been targeted by

this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.

Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes) and solicitations (such as debt relief) that fraudulently claim to be from

the IRS. The IRS encourages taxpayers to be vigilant against phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar

confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to phishing@irs.gov. .

-More information on how to report phishing scams involving the IRS is available at IRS.gov.

Put The Earned Income Tax Credit To Work For You

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f you earned less than $51,000 from wages, self-employment or farming last year, you may qualify for a refundable tax credit called the Earned Income Tax Credit, or EITC. But you must file a federal income tax return claiming the credit to get it. It’s even more valuable if your state also offers an EITC tax credit.

EITC can be a boost for working people, their families and communities. The Earned Income Tax Credit has continued to help improve the lives of workers for over 38 years. Yet each year many eligible workers go without claiming the credit, possibly because of changes to their financial, marital and parental statuses. Workers experiencing these changes may qualify for EITC for the first time.

IRS estimates four of five eligible workers claim and get EITC,

however rural and non-traditional families -- such as grandparents raising grandchildren -- childless workers, and non-English speaking taxpayers are among those who most frequently overlook the credit.

Unlike other tax credits, both EITC eligibility and the amount of tax credit you are eligible for is based on several factors. These include, the amount of your income, or combined incomes if married, whether you have qualifying children and how many. Workers without children also may qualify for EITC. The credit is complex, but worth exploring. You may qualify for EITC even if you had no federal tax withheld and would not otherwise be required to file. However, you must file and claim the credit to get it. The online EITC

Assistant at www.irs.gov/eitc can help you determine your eligibility and estimate the amount of your credit you are entitled to claim.

The IRS offers several free options to claim EITC, such as FreeFile and Volunteer Income Tax Assistance. FreeFile allows you to prepare and e-file your own tax return. Free help preparing EITC tax returns is also available at many volunteer income tax assistance sites.

Locate a volunteer site near you on IRS.GOV and selecting the VITA Locator tool or call the IRS at 1-800-906-9887.

Take the credit you’ve earned.

Learn more about EITC. Visit www.irs.gov/eitc, or get details in your tax software package.

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m Easy Tax Planning For A Bigger Refund

If, like most people, you could use some extra money these days, consider this: Three out of four Americans get an income tax refund from the IRS, and the average direct-deposited refund has totaled more than $2,800 for the last several years. Moving the needle above that average may be done with a little tax planning.

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To see exactly where you still have opportunities to save, do a dry run of your federal tax return,” said TaxACT spokesperson Jessi Dolmage. “DIY solutions like TaxACT are already updated with tax law changes so you can estimate your taxes as early as October each year.” These hints can help you maximize your refund or lower your tax liability.

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Remember all your abovethe-line adjustments, which are amounts you can deduct from your taxable income. They include college tuition and fees, educator expenses, moving expenses, alimony paid, contributions to a traditional IRA, student loan interest, and health insurance premiums if you’re self-employed.

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Maximize your itemized deductions. Those may include charitable gifts (cash and noncash, such as household items), unreimbursed medical expenses, job search expenses in your present occupation, tax preparation fees, mortgage interest and points paid, qualified mortgage insurance premiums, and personal property and real estate taxes. If you’re not sure if you have enough deductions to itemize, tax software can calculate whether claiming the standard deduction or itemizing is more advantageous, with the results typically backed by a maximum refund guarantee.

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Watch for these commonly missed tax credits, some of which are refundable: Earned Income Tax Credit, Child Tax Credit, Child and Dependent Care Credit and Saver’s Credit. If you have

college or other higher education expenses, don’t forget the American Opportunity and Lifetime Learning Credits.

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Review your investments to see if offsetting capital gains with losses is appropriate for you. Keep in mind that your tax rate on long-term capital gains may be lower than your rate on short-term capital gains.

5.

Save more for retirement.

While the tax year ends December 31 for most tax benefits, you have until April 15 to max out contributions to traditional and Roth IRAs. Contribution limits for both (as long as neither you nor your spouse was covered for any part of the year by an employer retirement plan) are the lesser of your taxable compensation (wages, commissions, selfemployment income, alimony and so on) or $5,500 for 2013 if you’re under age 50 ($6,500 if you’re age 50 or over). The contribution limit is reduced at higher incomes.

When the time comes to file your return, compare tax solutions carefully. Some brands charge more for returns with tax forms for more complicated situations. On the other hand, TaxACT’s free federal solution includes all e-fileable forms for simple and complicated returns.

The program uses simple interview questions to guide you through all your deductions and credits. The amount of your refund or taxes owed updates as you go. Some solutions, including TaxACT, also provide information about the tax implications of health care reform to help you make better-informed health

Using tax solutions can help you save a lot of money on your taxes.

insurance decisions.

General Tax Tips

• Choose e-file and direct deposit for the fastest refund.

• Don’t wait until April 15 to file—rushing often leads to errors.

• In the meantime, save all receipts, statements and tax forms in one place. Centralizing your information makes tax time easier and faster.

Learn More

Visit www.irs.gov and www. taxact.com to learn more about these tax breaks. To file your federal return free with TaxACT Free Edition, visit www.taxact.com.

-NAPS

DID YOU KNOW?

Americans spend 7.6 billion hours every year preparing taxes.

Sound like a lot? Well, there are roughly 312 million people in America according to the U.S. Census Bureau. That means every man, woman, and child spends 24.4 hours getting ready for tax day.

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Facts About the Premium Tax Credit Starting in 2014, if you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. The open enrollment period to purchase health insurance coverage for 2014 through the Marketplace runs from Oct. 1, 2013 through March 31, 2014.

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he Department of Health and Human Services administers the requirements for the Marketplace and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.

Eligibility You may be eligible for the credit if you meet all of the following: n buy health insurance through the Marketplace; n are ineligible for coverage through an employer or gov ernment plan; n are within certain income limits; n file a joint return, if married; and

n cannot be claimed as a de pendent by another person.

It’s your choice If you are eligible for the credit, you can choose to: n Get It Now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-ofpocket for your monthly premiums during 2014; or n Get It Later: wait to get the credit when you file your 2014 tax return in 2015.

Report changes in circumstances If you receive advance payment of the premium tax credit to help pay for your insurance premiums, you should report

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changes such as income or family size to your marketplace when they happen in 2014. Reporting changes will make sure you get the correct amount of the advanced credit. Receiving too much or too little in advance can affect your refund or balance due when you file your 2014 tax return in 2015.

Claim the credit Whether you choose to get the credit now or later, you must claim it by filing a federal income tax return.

When you file your 2014 tax return in 2015, you will subtract the total of any advance payments you received during the year from the amount of the premium tax credit calculated on your tax return. This may affect your tax refund or balance due. If you are entitled to more credit than you have already received; this will either increase your refund or lower your balance due.

-Find out more about the Premium Tax Credit at www.IRS.gov/aca

DID YOU KNOW?

Starting in 2014, most Americans will be required to buy minimum essential health insurance coverage. If they don’t, they must pay an annual penalty to the IRS, known as a “shared responsibility payment.”

The penalty will be equal to a specified dollar amount or a percentage of one’s household income, whichever is greater. It starts at $95 per person or 1% of income in 2014; rises to $325 or 2% of income in 2015; then increases to $695 per adult or 2.5% of income in 2016. Thereafter, the penalty will be adjusted for inflation.

Someone who lacks coverage for only part of the year would only pay part of the penalty. No penalty is due if someone goes without coverage for fewer than 90 days in a year.

People who earn too little to file tax returns and those for whom insurance would eat up more than 8% of their income are exempt, among others.

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The Benefits of Financial Planning Financial planning is often mistakenly assumed to be a concern for the wealthy. That assumption essentially promotes the idea that people without much money need not worry about what to do with their finances. However, financial planning can benefit people at all income levels, even helping those at lower income levels move into higher brackets if they plan successfully.

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hough having an idea of how to spend and grow your money is an idea many people would likely embrace, a significantly large number of people do not have a financial plan. In its 2012 Household Financial Planning Survey, the Certified Financial Planner Board of Standards found that just 31 percent of financial decision makers in families had created a financial plan. Some survey respondents did so on their own, while others used the services of a financial planner.

Though some might be intimidated or even scared to institute their

own financial plans, it can be done.

For those who are especially hesitant to develop their own financial plans, financial planners can help you define your goals and make those goals a reality. The benefits of financial planning are numerous, helping men and women build better financial futures. n A financial plan forces you to define your goals. One of the biggest advantages to financial planning is it forces men and women to define their financial goals. An effective financial plan should consider both short- and long-term goals. If you

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Working with a financial planner can help men and women define their financial goals and make those goals a reality.

hope to one day own a home, a financial plan can help you figure out how quickly you will own that home. A good financial plan also can help you map out a course for retirement. Ambiguity with respect to your finances is potentially dangerous. Saying you want to retire at 60 and developing a plan to make that happen are two very different things, but the latter can make it happen while the former won’t get you anywhere unless you take action. Be as specific as possible when defining your goals, and recognize that, depending on when you are making your financial plan, you might need to reassess those goals if they are not realistic. n A financial plan can help you curtail your spending. With a financial plan in place, you’re less likely to waste your money on frivolous things. Without a plan, you’re more likely to treat money as disposable, putting your financial future in jeopardy as a result. A careful

examination of your financial situation can shed light on areas where your spending is excessive.

A negative cash flow, which occurs when there is more money going out than coming in, has never been a part of a successful financial plan.

Correcting such a situation, which is often accomplished when people establish a financial plan that trims excessive spending, can go a long way toward securing your financial future. n A financial plan can be motivational. Another significant and often overlooked benefit to financial planning is how such planning can act as a motivator. A good financial plan will include certain measuring sticks, such as having debt paid off by a particular date or a certain day by which you hope to deposit a certain amount of money into your savings. These measuring sticks often motivate men and women to be more responsible with their money, and many people find living up to

short-term financial goals to be very rewarding. n A financial plan makes better use of your money. Even if you don’t have any negative spending habits, a financial plan can help you make better use of the money you do have. A closer examination of your finances can often yield a host of ways to grow your money or save it. For example, you might have multiple insurance policies, some of which offer duplicate coverage. Examining each policy and removing duplicate coverage can save you money and help you spend that money in better ways.

You wouldn’t pay for the same slice of pizza twice, so why pay for the same coverage twice? But unless you make a financial plan, you are unlikely to find those areas where you’re wasting money or discover the numerous ways in which your money can be better spent. n A financial plan helps you grow your money. Even if you are worried about investing or especially skittish when it comes to risk, you will need to find ways to grow your money, and a financial plan can help you do just that. The concept of inflation dictates that the dollar you have today won’t be worth as much next year, meaning you will need to take steps to grow your money if you hope to have enough to get by in retirement. A financial plan can help everyone, whether they’re risk-averse or not, grow their money. Something as simple as opening an interest-bearing account will grow your money more than if you were to put that money under the mattress. Without a financial plan that includes ways to grow your money, the money you have will only lessen in value as time goes on.

-Metro Creative Connection

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Saver’s Credit – Contribute To Your IRA By April 15 To Reduce Your Tax Bill You may qualify for the Saver’s Credit of up to $1,000 ($2,000 if married filing jointly) for contributions you make to an IRA, and you have until April 15, 2014, to make IRA contributions for 2013.

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nlike a deduction, a credit is a dollar-for-dollar reduction of your federal income tax liability and this credit can reduce the amount you owe or increase your refund for taxes already paid.

Are you eligible for the credit?

To claim the Saver’s Credit for 2013, you must:

1. Be age 18 or older, 2. Not be a full-time student, 3. Not be claimed as a de-

pendent on another person’s return, and Have an adjusted gross income of not more than: n $59,000 if your filing

4.

status is married filing jointly; n $44,250 if your filing status is head of house hold; or n $29,500 if your filing status is single, married filing separately or quali fying widow(er).

Are your 2013 contributions eligible for the credit?

Eligible contributions include: Contributions to a traditional or Roth IRA, and Salary reduction contributions (including voluntary after-tax and designated Roth contributions) to your employer’s 401(k), SIMPLE IRA,

1.

2.

SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan.

Rollover contributions aren’t eligible for the Saver’s Credit.

Your eligible contributions for the credit may be reduced by any recent distributions you received from an employer-sponsored retirement plan or an IRA. Amount of the credit The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10 percent or as high as 50 percent, depending on your income and your filing status.

Use the 2013 Form 8880,

Credit for Qualified Retirement Savings Contributions, to calculate and claim your credit.

-For more information and helpful resources on retirement topics see Publication 4703, Retirement Savings Contributions Credit at IRS.gov.

DID YOU KNOW?

You can use your IRA for down payment on a house (up to $10,000 for a first-time homeowner), for college education costs, for excessive health expenses and other hardships. You will owe tax on the withdrawn amount, but no penalty for early withdrawal. Caution! This is not true for your 401(k) money!

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for Taxpayers Who Owe Taxes While most taxpayers get a refund from the IRS when they file their taxes, some do not. The IRS offers several payment options for those who owe taxes.

Here are eight helpful tips to follow if you are one of the millions of Americans who will owe federal taxes this tax season.

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TAX BILL PAYMENTS. If you get a bill from the IRS this summer, you should pay it as soon as possible to save money.

You can pay by check, money order, cashier’s check or cash. If you cannot pay it all, consider getting a loan to pay the bill in full. The interest rate for a loan may be less than the interest and penalties the IRS must charge by law.

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ELECTRONIC FUNDS TRANSFER. It’s easy to pay your tax bill by electronic funds transfer. Just visit IRS.gov and use the Electronic Federal Tax Payment System. You may also use EFTPS to pay your taxes by phone at 800-555-4477.

3

CREDIT OR DEBIT CARD PAYMENTS. You can also pay your tax bill with a credit or debit card. Even though the card company may charge an extra fee for a tax payment, the costs of using a credit or debit card may be less than the cost of an IRS payment plan. To pay by credit or debit

card, contact one of the processing companies listed at IRS.gov.

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MORE TIME TO PAY. You may qualify for a shortterm agreement to pay your taxes. This may apply if you can fully pay your taxes in 120 days or less. You can request it through the Online Payment Agreement application at IRS. gov. You may also call the IRS at the number listed on the last notice you received. If you can’t find the notice, call 800-8291040 for help. There is generally no set-up fee for a short-term agreement.

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INSTALLMENT AGREEMENT. If you can’t pay in full at one time and can’t get a loan, you may want to apply for a monthly payment plan. If you owe $50,000 or less, you can apply using the IRS Online Payment Agreement application.

It’s quick and easy. If approved, IRS will notify you immediately.

You can arrange to make your payments by direct debit. This type of payment plan helps avoid missed payments and may help avoid a tax lien that would damage your credit.

Taxpayers may also apply using IRS Form 9465, Installment

Agreement Request. If you owe more than $50,000, you must also complete Form 433F, Collection Information Statement. For approved payment plans the onetime user fee is $105 for standard and payroll deduction agreements. The direct debit agreement fee is $52. The fee is $43 if your income is below a certain level.

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OFFER IN COMPROMISE. The IRS Offer-in-Compromise program allows you to settle your tax debt for less than the full amount you owe. An OIC may be an option if you can’t fully pay your taxes through an installment agreement or other payment alternative. The IRS may accept an OIC if the amount offered represents the most IRS can expect to collect within a reasonable time. Use the OIC Pre-Qualifier tool to see if you may be eligible before you apply. The tool will also direct you to other options if an OIC is not right for you.

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FRESH START. If you’re struggling to pay your taxes, the IRS Fresh Start initiative may help you. Fresh Start makes it easier for individual and small business taxpayers to pay back taxes and avoid tax liens.

8

CHECK WITHHOLDING. You may be able to avoid owing taxes in future years by increasing the taxes your employer withholds from your pay. To do this, file a revised Form W-4, Employee’s Withholding Allowance Certificate, with your employer.

The IRS Withholding Calculator tool at IRS.gov can help you fill out a new W-4.

- For more information about payment options or IRS’s Fresh Start program, visit IRS.gov.

Also, see Publications 594, The IRS Collection Process, and 966, Electronic Choices to Pay All Your Federal Taxes, for more information. Get publications and forms at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

If you find yourself owing taxes this year, there are a variety of options to help you make payments.

THE UPSTATE’S 2014

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IWANNA® TAX TIME SAVINGS --- January 28, 2014

New Opening Date For 2014 Tax Season

The Internal Revenue Service has announced plans to open the 2014 filing season on January 31 and encouraged taxpayers to use e-file or Free File as the fastest way to receive their refunds.

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he new opening date for individuals to file their 2013 tax returns will allow the IRS adequate time to program and test its tax processing systems. The annual process for updating IRS systems saw significant delays in October following the 16-day federal government closure.

“Our teams have been working hard throughout the fall to prepare for the upcoming tax season,” IRS Acting Commissioner Danny Werfel said. “The late January opening gives us enough time to get things right with our programming, testing and systems validation. It’s a complex process, and our bottomline goal is to provide a smooth filing and refund process for the nation’s taxpayers.”

The government closure meant the IRS had to change the original opening date from Jan. 21 to Jan. 31, 2014. The 2014 date is one day later than the 2013 filing season opening, which started on Jan. 30, 2013, following January tax law changes made by Congress on Jan. 1 under the American Taxpayer Relief Act (ATRA). The extensive

set of ATRA tax changes affected many 2012 tax returns, which led to the late January opening.

The IRS noted that several options are available to help taxpayers prepare for the 2014 tax season and get their refunds as easily as possible. New year-end tax planning information has been added to IRS.gov this week.

In addition, many software companies are expected to begin accepting tax returns in January and hold those returns until the IRS systems open on Jan. 31.

More details will be available in January.

The IRS cautioned that it will not process any tax returns before Jan. 31, so there is no advantage to filing on paper before the opening date. Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.

The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request

The October government closure affected about 90% of IRS operations, causing a delay for the 2014 season.

an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

IRS systems, applications and databases must be updated annually to reflect tax law updates, business process changes and programming updates in time for the start of the filing season.

The October closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core

systems is a complex, year-round process with the majority of the work beginning in the fall of each year.

About 90 percent of IRS operations were closed during the shutdown, with some major work streams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season. There are additional training, programming and testing demands on IRS systems this year in order to provide additional refund fraud and identity theft detection and prevention.

-For more information visit irs.gov

FUN FACTS

ABOUT TAXES?

Blueberries from Maine are subject to specific tax too, anyone who grows, purchases, sells, handles, or processes blueberries in Maine has to pay a penny and a half tax per pound.

There are over 7 million words in the tax law and regulations. That beats the Gettysburg address, the Declaration of Independence, and the Holy Bible all rolled into one (269+1,337+773k).

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Find FREE Tax Preparation Near You FREE tax help is closer than you think, probably right in your neighborhood. IRS-sponsored tax preparation programs can help you complete and electronically file your tax return for free, and will share information about tax credits and deductions for which you may qualify.

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he IRS Volunteer Income Tax Assistance (VITA) program offers free tax help to people who generally make $52,000 or less.

The Tax Counseling for the Elderly (TCE) program offers free tax assistance for all with priority assistance to people who are 60 years of age and older, specializing in questions about pensions and retirement issues unique to seniors.

At select tax sites, you have an option to prepare your own free basic federal and state tax return using Web-based tax preparation software this year. This is helpful if you do not want to wait in line or need a little help to get started or do not have access to a computer or the internet.

There are IRS-certified volunteers at all VITA and TCE sites who are trained in basic tax law.

Many locations have volunteers who speak other languages and can assist those who have difficulty communicating in English.

Volunteers are also available to help visitors complete and file their own returns.

In addition to free tax return preparation assistance, VITA and TCE sites provide free electronic filing.

The IRS has partnerships with many nonprofit groups, government agencies and organizations that host tax preparation sites in local communities. With thousands of these sites throughout the nation, there is a very good chance there’s one conveniently located near you.

As a supplement to the traditional face-to-face approach for return preparation, some IRS partners have leveraged the power of technology to provide increased

access to free tax preparation for individuals and families. Known as Virtual VITA/TCE, this program uses video chat software and secure file sharing technology to connect taxpayers and volunteer preparers in different geographic locations. Partners establish a convenient location for you to complete the required paperwork (including a consent form outlining the process). Your information is then securely transmitted (by scanner, fax, etc.) to an IRS-certified volunteer at another location to complete the return. To guide you through the return preparation process, you’ll be able to communicate “virtually” with the preparer using video chat software or other technology provided by the sites.

So, how do you find these free help sites? The locations and hours of operation of sites near you can be found once tax filing season begins using the VITA locator tool on www.IRS.gov and on the IRS2Go mobile application. The VITA/TCE sites will begin to appear on the locator tool approximately three weeks before they are scheduled to open. Most

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Why wait to prepare and file your federal taxes? IRS-certified volunteers can do it now for free.

sites open around the end of January. You can typically find locations and hours for these volunteer tax preparation sites through city and local community organization hotlines. You can also call the IRS toll-free at 1-800-906-9887.

A majority of the TCE sites are operated by the AARP Foundation’s Tax Aide Program. To locate the nearest TCE site or AARP

Tax-Aide site, use the AARP Site Locator Tool at www.aarp.org or call 888-227-7669.

FREE tax help is closer than you think, and finding it just a matter of a few easy clicks.

Please share information about these programs and how to find a site with your neighbors, family and friends who may qualify for this service.

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Tax Tips For Newlyweds Late spring and early summer are popular times for weddings. Whatever the season, a change in your marital status can affect your taxes. Here are several tips from the IRS for newlyweds. n It’s important that the names and Social Security numbers that you put on your tax return match your Social Security Administration records. If you’ve changed your name, report the change to the SSA. To do that, file Form SS-5, Application for a Social Security Card. You can get this form on their website at SSA. gov, by calling 800-772-1213 or by visiting your local SSA office. n If your address has changed, file Form 8822, Change of Address to notify the IRS. You should also notify the U.S. Postal Service if your address has changed. You can ask to have your mail forwarded online at USPS.com or report the change at your local post office.

n If you work, report your name or address change to your employer. This will help to ensure that you receive your Form W-2, Wage and Tax Statement, after the end of the year. n If you and your spouse both work, you should check the amount of federal income tax withheld from your pay. Your combined incomes may move you into a higher tax bracket. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4, Employee’s Withholding Allowance Certificate.

See Publication 505, Tax Withholding and Estimated Tax, for more information. n If you didn’t qualify to

Entering a new stage of life can also mean entering a new tax bracket.

itemize deductions before you were married, that may have changed. You and your spouse may save money by itemizing rather than taking the standard deduction on your tax return.

You’ll need to use Form 1040 with Schedule A, Itemized Deductions.

You can’t use Form 1040A or 1040EZ when you itemize. n If you are married as of Dec.

31, that’s your marital status for the entire year for tax purposes.

You and your spouse usually may choose to file your federal income tax return either jointly or separately in any given year. You may want to figure the tax both ways to determine which filing status results in the lowest tax. In most cases, it’s beneficial to file jointly.

-For more information about

these topics, visit IRS.gov. You can also get IRS forms and publications at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

DID YOU KNOW?

The first e-file (electronic transmission) of a tax return took place on January 24, 1986.

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How To Prepare For Tax Time

Although some are ready to say their fond farewells to 2013, thought needs to be given to the 12 months that just passed as tax-filing season approaches.

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ax season is a few months away, but it’s never too soon to begin preparations for filing income taxes. Some people prefer to toast the new year and then arrange appointments with their accountants, while others use the new year as an opportunity to get organized and start compiling paperwork and tax questions. Preparing for tax time at the dawn of a new year can make the process go more smoothly in the months ahead.

Here are some tips on how to prepare for the upcoming tax season. n Start a documents folder. Employers, charitable organizations, banks and other financial institutions begin mailing out tax forms from the previous year in early January. Individuals should keep their eyes open for any mail that appears to be tax-related. Store these documents in a folder that can protect any sensitive information. Such folders also make information more accessible as more and more documents arrive in the mail. n Begin collecting receipts and itemizing expenses. Many expenses are tax-deductible. These can include education costs, moving expenses, home improvements, medical expenses, charitable donations and childcare costs. Store receipts and other documentation,

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including canceled checks, with the other tax documents. These will come in handy should an audit ever be ordered. n Create a spreadsheet of important information. It is handy to have all financial information at the ready. Some accountants will lower their fees if people do some of the filing preparation work themselves. This can include creating a profit/loss statement on investments, or working up a tally of charitable donations. Make an itemized list of all pertinent information so it will be handy when tax-filing time arrives. n Decide on a filing option. Technology has made filing taxes much easier. Tax preparation software is available for those who choose to file their taxes themselves. There also are walk-in centers that will prepare tax-filing documents.

Individuals also can visit a certified public accountant. Whatever method taxpayers choose, allow for ample time to gather information and get the taxes filed by the deadline. Leave some wiggle room in case one filing method doesn’t work out. n Start saving money. Although the goal is to get a refund each and every year, taxpayers sometimes owe money, which can be troublesome for men and women

whose budgets are stretched thin already. Those who owed money in the past should begin saving money for tax expenses as early as possible. n Develop a good filing system.

Many financial professionals will advise people to keep financial records for 7 years. Any tax documents should be kept together

should they need to be referenced or if an audit is ordered. Designate a filing cabinet or a box specifically for tax documents.

Tax filing season is right around the corner, and the dawn of a new year is a great time for men and women to start gathering documents and preparing their returns.

-Metro Creative Connection

FUN FACTS ABOUT TAXES?

The IRS sends out 8 billion pages of forms and instructions each year? If you laid all of this paper out, end to end, the trail would stretch around the Earth 28 times!

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IRS Warns Of Pervasive Telephone Scam The Internal Revenue Service today warned consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country.

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ictims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.

“This scam has hit taxpayers in nearly every state in the country.

We want to educate taxpayers so they can help protect themselves.

Rest assured, we do not and will not ask for credit card numbers over the phone, nor request a prepaid debit card or wire transfer,” says IRS Acting Commissioner Danny Werfel. “If someone unexpectedly calls claiming to be from the IRS and threatens police arrest, deportation or license revocation if you don’t pay immediately, that is a sign that it really isn’t the IRS calling.” Werfel noted that the first IRS contact with taxpayers on a tax issue is likely to occur via mail Other characteristics of this scam include: n Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves. n Scammers may be able to recite the last four digits of a vic-

tim’s Social Security Number. n Scammers spoof the IRS toll-free number on caller ID to make it appear that it’s the IRS calling. n Scammers sometimes send bogus IRS emails to some victims to support their bogus calls. n Victims hear background noise of other calls being conducted to mimic a call site. n After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

If you get a phone call from someone claiming to be from the IRS, here’s what you should do: n If you know you owe taxes or you think you might owe taxes, call the IRS at 1.800.829.1040.

The IRS employees at that line can help you with a payment issue – if there really is such an issue. n If you know you don’t owe taxes or have no reason to think that you owe any taxes (for example, you’ve never received a bill or the caller made some bogus threats as described above), then call and report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484. n If you’ve been targeted by

this scam, you should also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.

Taxpayers should be aware that there are other unrelated scams (such as a lottery sweepstakes) and solicitations (such as debt relief) that fraudulently claim to be from

the IRS. The IRS encourages taxpayers to be vigilant against phone and email scams that use the IRS as a lure. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar

confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to phishing@irs.gov. .

-More information on how to report phishing scams involving the IRS is available at IRS.gov.

Put The Earned Income Tax Credit To Work For You

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f you earned less than $51,000 from wages, self-employment or farming last year, you may qualify for a refundable tax credit called the Earned Income Tax Credit, or EITC. But you must file a federal income tax return claiming the credit to get it. It’s even more valuable if your state also offers an EITC tax credit.

EITC can be a boost for working people, their families and communities. The Earned Income Tax Credit has continued to help improve the lives of workers for over 38 years. Yet each year many eligible workers go without claiming the credit, possibly because of changes to their financial, marital and parental statuses. Workers experiencing these changes may qualify for EITC for the first time.

IRS estimates four of five eligible workers claim and get EITC,

however rural and non-traditional families -- such as grandparents raising grandchildren -- childless workers, and non-English speaking taxpayers are among those who most frequently overlook the credit.

Unlike other tax credits, both EITC eligibility and the amount of tax credit you are eligible for is based on several factors. These include, the amount of your income, or combined incomes if married, whether you have qualifying children and how many. Workers without children also may qualify for EITC. The credit is complex, but worth exploring. You may qualify for EITC even if you had no federal tax withheld and would not otherwise be required to file. However, you must file and claim the credit to get it. The online EITC

Assistant at www.irs.gov/eitc can help you determine your eligibility and estimate the amount of your credit you are entitled to claim.

The IRS offers several free options to claim EITC, such as FreeFile and Volunteer Income Tax Assistance. FreeFile allows you to prepare and e-file your own tax return. Free help preparing EITC tax returns is also available at many volunteer income tax assistance sites.

Locate a volunteer site near you on IRS.GOV and selecting the VITA Locator tool or call the IRS at 1-800-906-9887.

Take the credit you’ve earned.

Learn more about EITC. Visit www.irs.gov/eitc, or get details in your tax software package.

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m Easy Tax Planning For A Bigger Refund

If, like most people, you could use some extra money these days, consider this: Three out of four Americans get an income tax refund from the IRS, and the average direct-deposited refund has totaled more than $2,800 for the last several years. Moving the needle above that average may be done with a little tax planning.

“

To see exactly where you still have opportunities to save, do a dry run of your federal tax return,” said TaxACT spokesperson Jessi Dolmage. “DIY solutions like TaxACT are already updated with tax law changes so you can estimate your taxes as early as October each year.” These hints can help you maximize your refund or lower your tax liability.

1.

Remember all your abovethe-line adjustments, which are amounts you can deduct from your taxable income. They include college tuition and fees, educator expenses, moving expenses, alimony paid, contributions to a traditional IRA, student loan interest, and health insurance premiums if you’re self-employed.

2.

Maximize your itemized deductions. Those may include charitable gifts (cash and noncash, such as household items), unreimbursed medical expenses, job search expenses in your present occupation, tax preparation fees, mortgage interest and points paid, qualified mortgage insurance premiums, and personal property and real estate taxes. If you’re not sure if you have enough deductions to itemize, tax software can calculate whether claiming the standard deduction or itemizing is more advantageous, with the results typically backed by a maximum refund guarantee.

3.

Watch for these commonly missed tax credits, some of which are refundable: Earned Income Tax Credit, Child Tax Credit, Child and Dependent Care Credit and Saver’s Credit. If you have

college or other higher education expenses, don’t forget the American Opportunity and Lifetime Learning Credits.

4.

Review your investments to see if offsetting capital gains with losses is appropriate for you. Keep in mind that your tax rate on long-term capital gains may be lower than your rate on short-term capital gains.

5.

Save more for retirement.

While the tax year ends December 31 for most tax benefits, you have until April 15 to max out contributions to traditional and Roth IRAs. Contribution limits for both (as long as neither you nor your spouse was covered for any part of the year by an employer retirement plan) are the lesser of your taxable compensation (wages, commissions, selfemployment income, alimony and so on) or $5,500 for 2013 if you’re under age 50 ($6,500 if you’re age 50 or over). The contribution limit is reduced at higher incomes.

When the time comes to file your return, compare tax solutions carefully. Some brands charge more for returns with tax forms for more complicated situations. On the other hand, TaxACT’s free federal solution includes all e-fileable forms for simple and complicated returns.

The program uses simple interview questions to guide you through all your deductions and credits. The amount of your refund or taxes owed updates as you go. Some solutions, including TaxACT, also provide information about the tax implications of health care reform to help you make better-informed health

Using tax solutions can help you save a lot of money on your taxes.

insurance decisions.

General Tax Tips

• Choose e-file and direct deposit for the fastest refund.

• Don’t wait until April 15 to file—rushing often leads to errors.

• In the meantime, save all receipts, statements and tax forms in one place. Centralizing your information makes tax time easier and faster.

Learn More

Visit www.irs.gov and www. taxact.com to learn more about these tax breaks. To file your federal return free with TaxACT Free Edition, visit www.taxact.com.

-NAPS

DID YOU KNOW?

Americans spend 7.6 billion hours every year preparing taxes.

Sound like a lot? Well, there are roughly 312 million people in America according to the U.S. Census Bureau. That means every man, woman, and child spends 24.4 hours getting ready for tax day.

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Facts About the Premium Tax Credit Starting in 2014, if you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. The open enrollment period to purchase health insurance coverage for 2014 through the Marketplace runs from Oct. 1, 2013 through March 31, 2014.

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he Department of Health and Human Services administers the requirements for the Marketplace and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.

Eligibility You may be eligible for the credit if you meet all of the following: n buy health insurance through the Marketplace; n are ineligible for coverage through an employer or gov ernment plan; n are within certain income limits; n file a joint return, if married; and

n cannot be claimed as a de pendent by another person.

It’s your choice If you are eligible for the credit, you can choose to: n Get It Now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-ofpocket for your monthly premiums during 2014; or n Get It Later: wait to get the credit when you file your 2014 tax return in 2015.

Report changes in circumstances If you receive advance payment of the premium tax credit to help pay for your insurance premiums, you should report

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changes such as income or family size to your marketplace when they happen in 2014. Reporting changes will make sure you get the correct amount of the advanced credit. Receiving too much or too little in advance can affect your refund or balance due when you file your 2014 tax return in 2015.

Claim the credit Whether you choose to get the credit now or later, you must claim it by filing a federal income tax return.

When you file your 2014 tax return in 2015, you will subtract the total of any advance payments you received during the year from the amount of the premium tax credit calculated on your tax return. This may affect your tax refund or balance due. If you are entitled to more credit than you have already received; this will either increase your refund or lower your balance due.

-Find out more about the Premium Tax Credit at www.IRS.gov/aca

DID YOU KNOW?

Starting in 2014, most Americans will be required to buy minimum essential health insurance coverage. If they don’t, they must pay an annual penalty to the IRS, known as a “shared responsibility payment.”

The penalty will be equal to a specified dollar amount or a percentage of one’s household income, whichever is greater. It starts at $95 per person or 1% of income in 2014; rises to $325 or 2% of income in 2015; then increases to $695 per adult or 2.5% of income in 2016. Thereafter, the penalty will be adjusted for inflation.

Someone who lacks coverage for only part of the year would only pay part of the penalty. No penalty is due if someone goes without coverage for fewer than 90 days in a year.

People who earn too little to file tax returns and those for whom insurance would eat up more than 8% of their income are exempt, among others.

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The Benefits of Financial Planning Financial planning is often mistakenly assumed to be a concern for the wealthy. That assumption essentially promotes the idea that people without much money need not worry about what to do with their finances. However, financial planning can benefit people at all income levels, even helping those at lower income levels move into higher brackets if they plan successfully.

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hough having an idea of how to spend and grow your money is an idea many people would likely embrace, a significantly large number of people do not have a financial plan. In its 2012 Household Financial Planning Survey, the Certified Financial Planner Board of Standards found that just 31 percent of financial decision makers in families had created a financial plan. Some survey respondents did so on their own, while others used the services of a financial planner.

Though some might be intimidated or even scared to institute their

own financial plans, it can be done.

For those who are especially hesitant to develop their own financial plans, financial planners can help you define your goals and make those goals a reality. The benefits of financial planning are numerous, helping men and women build better financial futures. n A financial plan forces you to define your goals. One of the biggest advantages to financial planning is it forces men and women to define their financial goals. An effective financial plan should consider both short- and long-term goals. If you

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Working with a financial planner can help men and women define their financial goals and make those goals a reality.

hope to one day own a home, a financial plan can help you figure out how quickly you will own that home. A good financial plan also can help you map out a course for retirement. Ambiguity with respect to your finances is potentially dangerous. Saying you want to retire at 60 and developing a plan to make that happen are two very different things, but the latter can make it happen while the former won’t get you anywhere unless you take action. Be as specific as possible when defining your goals, and recognize that, depending on when you are making your financial plan, you might need to reassess those goals if they are not realistic. n A financial plan can help you curtail your spending. With a financial plan in place, you’re less likely to waste your money on frivolous things. Without a plan, you’re more likely to treat money as disposable, putting your financial future in jeopardy as a result. A careful

examination of your financial situation can shed light on areas where your spending is excessive.

A negative cash flow, which occurs when there is more money going out than coming in, has never been a part of a successful financial plan.

Correcting such a situation, which is often accomplished when people establish a financial plan that trims excessive spending, can go a long way toward securing your financial future. n A financial plan can be motivational. Another significant and often overlooked benefit to financial planning is how such planning can act as a motivator. A good financial plan will include certain measuring sticks, such as having debt paid off by a particular date or a certain day by which you hope to deposit a certain amount of money into your savings. These measuring sticks often motivate men and women to be more responsible with their money, and many people find living up to

short-term financial goals to be very rewarding. n A financial plan makes better use of your money. Even if you don’t have any negative spending habits, a financial plan can help you make better use of the money you do have. A closer examination of your finances can often yield a host of ways to grow your money or save it. For example, you might have multiple insurance policies, some of which offer duplicate coverage. Examining each policy and removing duplicate coverage can save you money and help you spend that money in better ways.

You wouldn’t pay for the same slice of pizza twice, so why pay for the same coverage twice? But unless you make a financial plan, you are unlikely to find those areas where you’re wasting money or discover the numerous ways in which your money can be better spent. n A financial plan helps you grow your money. Even if you are worried about investing or especially skittish when it comes to risk, you will need to find ways to grow your money, and a financial plan can help you do just that. The concept of inflation dictates that the dollar you have today won’t be worth as much next year, meaning you will need to take steps to grow your money if you hope to have enough to get by in retirement. A financial plan can help everyone, whether they’re risk-averse or not, grow their money. Something as simple as opening an interest-bearing account will grow your money more than if you were to put that money under the mattress. Without a financial plan that includes ways to grow your money, the money you have will only lessen in value as time goes on.

-Metro Creative Connection

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Saver’s Credit – Contribute To Your IRA By April 15 To Reduce Your Tax Bill You may qualify for the Saver’s Credit of up to $1,000 ($2,000 if married filing jointly) for contributions you make to an IRA, and you have until April 15, 2014, to make IRA contributions for 2013.

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nlike a deduction, a credit is a dollar-for-dollar reduction of your federal income tax liability and this credit can reduce the amount you owe or increase your refund for taxes already paid.

Are you eligible for the credit?

To claim the Saver’s Credit for 2013, you must:

1. Be age 18 or older, 2. Not be a full-time student, 3. Not be claimed as a de-

pendent on another person’s return, and Have an adjusted gross income of not more than: n $59,000 if your filing

4.

status is married filing jointly; n $44,250 if your filing status is head of house hold; or n $29,500 if your filing status is single, married filing separately or quali fying widow(er).

Are your 2013 contributions eligible for the credit?

Eligible contributions include: Contributions to a traditional or Roth IRA, and Salary reduction contributions (including voluntary after-tax and designated Roth contributions) to your employer’s 401(k), SIMPLE IRA,

1.

2.

SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan.

Rollover contributions aren’t eligible for the Saver’s Credit.

Your eligible contributions for the credit may be reduced by any recent distributions you received from an employer-sponsored retirement plan or an IRA. Amount of the credit The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10 percent or as high as 50 percent, depending on your income and your filing status.

Use the 2013 Form 8880,

Credit for Qualified Retirement Savings Contributions, to calculate and claim your credit.

-For more information and helpful resources on retirement topics see Publication 4703, Retirement Savings Contributions Credit at IRS.gov.

DID YOU KNOW?

You can use your IRA for down payment on a house (up to $10,000 for a first-time homeowner), for college education costs, for excessive health expenses and other hardships. You will owe tax on the withdrawn amount, but no penalty for early withdrawal. Caution! This is not true for your 401(k) money!

Page 16

IWANNA® TAX TIME SAVINGS --- January 28, 2014

iwanna.com

for Taxpayers Who Owe Taxes While most taxpayers get a refund from the IRS when they file their taxes, some do not. The IRS offers several payment options for those who owe taxes.

Here are eight helpful tips to follow if you are one of the millions of Americans who will owe federal taxes this tax season.

1

Tax Bill payMenTS. If you get a bill from the IRS this summer, you should pay it as soon as possible to save money.

You can pay by check, money order, cashier’s check or cash. If you cannot pay it all, consider getting a loan to pay the bill in full. The interest rate for a loan may be less than the interest and penalties the IRS must charge by law.

2

eleCTRoniC FunDS TRanSFeR. It’s easy to pay your tax bill by electronic funds transfer. Just visit IRS.gov and use the Electronic Federal Tax Payment System. You may also use EFTPS to pay your taxes by phone at 800-555-4477.

3

CReDiT oR DeBiT CaRD payMenTS. You can also pay your tax bill with a credit or debit card. Even though the card company may charge an extra fee for a tax payment, the costs of using a credit or debit card may be less than the cost of an IRS payment plan. To pay by credit or debit

card, contact one of the processing companies listed at IRS.gov.

4

MoRe TiMe To pay. You may qualify for a shortterm agreement to pay your taxes. This may apply if you can fully pay your taxes in 120 days or less. You can request it through the Online Payment Agreement application at IRS. gov. You may also call the IRS at the number listed on the last notice you received. If you can’t find the notice, call 800-8291040 for help. There is generally no set-up fee for a short-term agreement.

5

inSTallMenT aGReeMenT. If you can’t pay in full at one time and can’t get a loan, you may want to apply for a monthly payment plan. If you owe $50,000 or less, you can apply using the IRS Online Payment Agreement application.

It’s quick and easy. If approved, IRS will notify you immediately.

You can arrange to make your payments by direct debit. This type of payment plan helps avoid missed payments and may help avoid a tax lien that would damage your credit.

Taxpayers may also apply using IRS Form 9465, Installment

Agreement Request. If you owe more than $50,000, you must also complete Form 433F, Collection Information Statement. For approved payment plans the onetime user fee is $105 for standard and payroll deduction agreements. The direct debit agreement fee is $52. The fee is $43 if your income is below a certain level.

6

oFFeR in CoMpRoMiSe. The IRS Offer-in-Compromise program allows you to settle your tax debt for less than the full amount you owe. An OIC may be an option if you can’t fully pay your taxes through an installment agreement or other payment alternative. The IRS may accept an OIC if the amount offered represents the most IRS can expect to collect within a reasonable time. Use the OIC Pre-Qualifier tool to see if you may be eligible before you apply. The tool will also direct you to other options if an OIC is not right for you.

7

FReSh STaRT. If you’re struggling to pay your taxes, the IRS Fresh Start initiative may help you. Fresh Start makes it easier for individual and small business taxpayers to pay back taxes and avoid tax liens.

8

CheCK WiThholDinG. You may be able to avoid owing taxes in future years by increasing the taxes your employer withholds from your pay. To do this, file a revised Form W-4, Employee’s Withholding Allowance Certificate, with your employer.

The IRS Withholding Calculator tool at IRS.gov can help you fill out a new W-4.

- For more information about payment options or IRS’s Fresh Start program, visit IRS.gov.

Also, see Publications 594, The IRS Collection Process, and 966, Electronic Choices to Pay All Your Federal Taxes, for more information. Get publications and forms at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

If you find yourself owing taxes this year, there are a variety of options to help you make payments.

s

options

iwanna.com

IWANNA速 TAX TIME SAVINGS --- January 28, 2014

Page 17

Page 18

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

How to Properly Store Personal Records

Certain personal and financial documents need to be kept for security and other purposes, while some documents can be discarded immediately.

D

ocuments that must be kept often include sensitive information, which means they shouldn’t be stored haphazardly. Options for maintaining important records continue to evolve, but caution still must reign supreme when storing potentially sensitive documents.

The Federal Trade Commission estimates that nearly 10 million people have their identities stolen each year. Identity theft occurs when criminals use another person’s personal information, such as his or her name, credit

card numbers or social security number, without permission.

Sensitive information can be lifted from personal effects stored in a person’s home or from items delivered to a mailbox. Here are some ways to keep information private and out of the hands of potential thieves. n SORT YOUR DOCUMENTS. When sorting documents, which should be done regularly, determine which include sensitive information and move them aside.

Bills and other papers that do not reveal much may be stored in a regular filing system, but docu-

Properly storing your records will save you time and money in the long run.

ments that contain sensitive information should be kept in more secure locations. n INVEST IN A DURABLE, FIREPROOF SAFE. Store sensitive documents, including social security cards, marriage certificates, birth certificates, travel documents, life insurance policies, and mortgage paperwork, in a durable, fireproof safe. If you prefer to keep these items off-premises, keep them under lock and key in a bank safety deposit box. n ORGANIZE YOUR DOCUMENTS AND MAINTAIN THAT ORGANIZATION. Be sure to carefully label all boxes or cabinets in which important documents are stored. Create a filing system that works for your needs. You may want to organize the papers by date, type of document or your own coding method.

Think about cross-referencing your tangible files with a master list so you’ll know the exact location of certain documents when you need them. n CONSIDER DIGITAL STORAGE. Various programs that work with a scanner or camera can now capture images of important paperwork and then convert these images into digital files that can be tagged and categorized. The information is then stored digitally on a computer and can be retrieved with a few clicks of the mouse.

Computers that are used to store personal information should be password-protected. Never share potentially sensitive documents via email or through nonencrypted

communication methods. Otherwise you risk information being stolen by hackers. When documents are stored digitally, make sure you keep backup versions.

These can be kept on external hard drives or uploaded to secure servers. Should anything happen to your computer, you will have the backup version of your important

files. n SHRED DOCUMENTS WHEN THE TIME COMES. Every file does not have to be kept forever. When discarding documents, put them through a paper shredder before recycling or putting them in the trash.

-Metro Creative Connection

HOW LONG TO STORE CERTAIN DOCUMENTS BANK STATEMENTS - One year, unless needed to support tax filings

BIRTH CERTIFICATES - Forever CONTRACTS - Until updated CREDIT CARD RECORDS - Until paid, unless needed to support tax filings

EDUCATION DOCUMENTS - Forever HOME RECORDS - As long as you own the property INVESTMENT CERTIFICATES - Until sold or cashed in LIFE INSURANCE RECORDS - Forever MILITARY SERVICE RECORDS - Forever TAX RECORDS - Seven years from filing date VEHICLE TITLES - Until the vehicle is sold WILL - Until the will is updated

iwanna.com

IWANNA速 TAX TIME SAVINGS --- January 28, 2014

IRS Offers New Tax Guide to Help Prepare 2013 Taxes

Taxpayers can get the most out of various tax benefits and get a jump on preparing their 2013 federal income tax returns by consulting a newly revised comprehensive tax guide now available on IRS.gov.

P

ublication 17, Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American Opportunity Tax Credit for parents and college students, and the Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers. It also features a rundown on tax changes for 2013 including information on revised tax rates and new limits on various tax benefits for some taxpayers. This useful 292-page guide also provides thousands of 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 web site 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 2013 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 and short Forms 1040A and1040EZ. -For more information, visit irs.gov

Page 19

Page 20

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

Financial Considerations For Those Nearing Retirement Retirement can simultaneously excite and distress men and women as they approach the day when they end their careers. Anticipating the freedom can be exciting, while concerns about maintaining financial independence can be stressful.

T

hough there are no guarantees that men and women who prioritize retirement planning will not outlive their finances, those who do arrange their priorities in such a manner are far more likely to enjoy a comfortable retirement without worrying about their finances. As men and women approach retirement age, certain steps with regard to preparing for retirement can put them in position to enjoy their golden years to the fullest.

n Assess your resources. An honest assessment of your assets will help you determine a retirement lifestyle you can afford. Assets can include any property you own, investments, savings, and retirement accounts. Your property may be your biggest financial asset, but unless you plan to sell that property or take out a reverse mortgage, then you won’t be able to rely on that property to fund your lifestyle.

When assessing resources, keep in mind that you might have to

pay potentially steep taxes when attempting to access any retirement accounts, such as a 401(k). Factor in any such taxes when assessing your retirement resources. n Make a list of your monthly expenses. Once you have assessed your resources, make a list of your monthly bills. Mortgage payments, healthcare costs, taxes, and food are among the essentials, while additional expenses like travel and entertainment will need to be factored in as well. When considering monthly expenses, keep in mind that some of those expenses, including mortgage payments and commuting costs, will likely disappear, while others, including healthcare costs, are likely to increase significantly. Once you have assessed your resources and expenses, you can then begin to paint a picture of the retirement lifestyle you can afford to live. n Compare the lifestyle you want to live versus the one you can afford to live. Considering your finances several years before you retire affords you the opportunity to make changes if you determine the retirement you can afford does not exactly match up with the retirement you want to live. After you have figured out what you can afford, compare that lifestyle to the one you hope to live. If they are one and the same, then you did a great job planning

Men and women must make a host of financial decisions as retirement draws closer.

for retirement. If they are slightly or significantly different, then look for ways to close that gap. If necessary, consult with a financial planner, who might be able to help turn your dream retirement into a reality. Closing the gap between your dream retirement and the one

you can afford to live may require you to work an extra year or two, so be prepared to make that decision if need be. n Plan on continuing to grow your money. Just because you’re retiring does not mean your money has to stop working as well. You will still need to combat inflation during your golden years, so plan on continuing to grow your money even after you retire. Though it’s best to reduce investment risks as you age, many retirees still need to keep a toe in the investment waters. Find a balance you’re comfortable with so your money continues to grow, but be conservative at the same time. As you grow older, continue to reduce your risk. While conventional wisdom long suggested retirees should completely eliminate risk from their portfolios, today’s retirees are living longer than ever before, so you likely can’t afford to follow the advice of yesteryear.

As retirement draws closer, men and women must start making important financial decisions to ensure their nest eggs can support the lifestyles they want to live throughout their golden years.

-Metro Creative Connection

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

How Homeowners Can Reduce Their Monthly Expenses Saving money is a priority for many people. But reducing monthly expenses is typically a bigger concern for homeowners, especially new homeowners adjusting to life with a mortgage, higher energy bills than they likely had while renting and other costs associated with owning their own homes.

H

ome ownership is a dream for many people, but the realization of just how expensive owning a home can be is often eyeopening once you get the keys and move in. Once the initial sticker shock has worn off, homeowners should know that the cost of home ownership need not be so steep. In fact, there are several ways homeowners can cut costs without drastically changing their lifestyle. n Combine your insurance coverages. Many lenders mandate that borrowers carry homeowners insurance for their homes. The cost of coverage varies from company to company, and one of the ways homeowners can reduce the cost of their homeowners insurance is to bundle their homeowners coverage with their auto insurance. Some companies provide discounted premiums as high as 15 percent for policy holders who combine their homeowners and auto insurance coverage. Speak with your current provider to determine if combining your coverage could save you money. If the savings are not significant, shop around for an insurance company that can offer you the lower price you desire. Just be sure the company is accessible and reputable. n Refinance your mortgage.

Refinancing your mortgage is another great way homeowners can save a substantial amount of money. Even if you only recently purchased your home, your lender might be willing to refinance your mortgage with a lower interest rate. Depending on the amount of time and money left on your loan, reducing your interest rate by 2 percent can save you a substantial amount of money on your monthly mortgage payment, which can add up to considerable savings on the total interest you will pay over the life of the loan. If you think your interest rate is a tad too high, consult your lender and discuss

refinancing at a lower rate. n Bundle your services. More and more consumers have decided to bundle their Internet, phone and television packages. Consumer Reports found that bundling just two of those services instead of buying them from separate providers can save consumers between 40 to 60 percent depending on where they live. Rates for bundling packages often come with an expiration date, but a Consumer Reports survey found that even those packages come with some wiggle room. In their 2011 Annual Telecom Survey, Consumer Reports found that one-third of survey participants attempted to negotiate a lower rate for their bundled services, and 90 percent of those efforts were successful.

When negotiating, discuss lower prices for bundling as well as extending the package beyond the current expiration date.It never hurts to ask, and one study has already shown that it actually helps to ask. n Go green. Going green benefits the environment, and it’s almost certain to benefit homeowners’ wallets. According to the U.S. Environmental Protection Agency, toilets account for more water usage in the home than any other appliance or fixture. But the EPA also notes that a family of four can save thousands of dollars by switching to a high-efficiency toilet over that toilet’s lifetime. And installing eco-friendly appliances or fixtures around your home might even make you eligible for certain tax breaks while also updating your home, something that will make the home more attractive to prospective buyers when you sell down the road. There are many ways to make a home more environmentally friendly, and nearly all of them can save you money over the long run.

-Metro Creative Connection

Refinancing an existing mortgage is one way homeowners can reduce their monthly expenses.

Page 21

Ta x Page 22

The 1040 form was introduced in 1914 with just one or two pages; in 2012 the 1040 form totaled more than 170 pages!

You can make big money reporting a company for tax evasion. It’s called the Whistleblower Informant Award.

From the IRS website:

••• The first-ever income tax was collected in 1404 A.D. The place — England. It was so hated that all records of it were burned. However, in 1798 Prime Minister William Pitt the Younger implemented income taxes to pay for weapons and equipment for the Napoleonic Wars.

Taxes have been a part of English life ever since.

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

“The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30% of the additional tax, penalty and other amounts it collects.”

So if you know something and want a clean conscience, you may actually be rewarded for coming clean.

••• If your child is a full-time student for 5 months of the year and is under 24 years old, he (she) may still be your dependent.

If you will owe taxes, don’t wait until you have the money to pay to file your tax return. The failure to file on time penalty is 5% per month! An extension gives you more time to file the return, but not to pay what you owe. You owe interest at 0.5% per month on the tax you owe beginning on April 15th and continuing until the tax is paid in full, no matter when you file the return.

The Child Credit is $1,000 per child age 16 and younger. This credit is refundable if the amount of taxes you owe is less than the amount of your credit.

•••

•••

Generally, your dependent must live with you. Your parent is the exception to that rule. If you provide more than half the support of your parent, you may claim the exemption even though your parent does not live with you.

••• Pennsylvania’s alcohol tax was designed to help the city of Johnstown, which had a devastating flood in 1936. That tax is still collected and brings in $200,000,000 a year.

Many taxpayers age 70 ½ or older can transfer as much as $100,000 a year directly from their IRAs to qualified charities without having to count any of that transfer as income. The transfers count toward the taxpayer’s required minimum distribution for the year.

You can deduct up to $2500 of the interest paid on your student loan even if you weren’t the one who made the payments as long as you are legally responsible for the debt. (Phase-out rules apply.)

••• You know how everyone hates the taxman? Did you know that in 1789, the start of the French Revolution, tax collectors were sent to the guillotine? Poor folks were just doing their jobs… it’s not like they enjoyed it!

••• If you are taking a course at any accredited school, you may be able to take a credit on your return for the tuition you paid.

••• Our tax system has become so complicated that it is almost impossible to file your taxes correctly.

For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household. All 46 of them came up with a different result.

••• The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.

iwanna.com

IWANNA速 TAX TIME SAVINGS --- January 28, 2014

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IWANNA速 TAX TIME SAVINGS --- January 28, 2014

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Page 18

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

How to Properly Store Personal Records

Certain personal and financial documents need to be kept for security and other purposes, while some documents can be discarded immediately.

D

ocuments that must be kept often include sensitive information, which means they shouldn’t be stored haphazardly. Options for maintaining important records continue to evolve, but caution still must reign supreme when storing potentially sensitive documents.

The Federal Trade Commission estimates that nearly 10 million people have their identities stolen each year. Identity theft occurs when criminals use another person’s personal information, such as his or her name, credit

card numbers or social security number, without permission.

Sensitive information can be lifted from personal effects stored in a person’s home or from items delivered to a mailbox. Here are some ways to keep information private and out of the hands of potential thieves. n SORT YOUR DOCUMENTS. When sorting documents, which should be done regularly, determine which include sensitive information and move them aside.

Bills and other papers that do not reveal much may be stored in a regular filing system, but docu-

Properly storing your records will save you time and money in the long run.

ments that contain sensitive information should be kept in more secure locations. n INVEST IN A DURABLE, FIREPROOF SAFE. Store sensitive documents, including social security cards, marriage certificates, birth certificates, travel documents, life insurance policies, and mortgage paperwork, in a durable, fireproof safe. If you prefer to keep these items off-premises, keep them under lock and key in a bank safety deposit box. n ORGANIZE YOUR DOCUMENTS AND MAINTAIN THAT ORGANIZATION. Be sure to carefully label all boxes or cabinets in which important documents are stored. Create a filing system that works for your needs. You may want to organize the papers by date, type of document or your own coding method.

Think about cross-referencing your tangible files with a master list so you’ll know the exact location of certain documents when you need them. n CONSIDER DIGITAL STORAGE. Various programs that work with a scanner or camera can now capture images of important paperwork and then convert these images into digital files that can be tagged and categorized. The information is then stored digitally on a computer and can be retrieved with a few clicks of the mouse.

Computers that are used to store personal information should be password-protected. Never share potentially sensitive documents via email or through nonencrypted

communication methods. Otherwise you risk information being stolen by hackers. When documents are stored digitally, make sure you keep backup versions.

These can be kept on external hard drives or uploaded to secure servers. Should anything happen to your computer, you will have the backup version of your important

files. n SHRED DOCUMENTS WHEN THE TIME COMES. Every file does not have to be kept forever. When discarding documents, put them through a paper shredder before recycling or putting them in the trash.

-Metro Creative Connection

HOW LONG TO STORE CERTAIN DOCUMENTS BANK STATEMENTS - One year, unless needed to support tax filings

BIRTH CERTIFICATES - Forever CONTRACTS - Until updated CREDIT CARD RECORDS - Until paid, unless needed to support tax filings

EDUCATION DOCUMENTS - Forever HOME RECORDS - As long as you own the property INVESTMENT CERTIFICATES - Until sold or cashed in LIFE INSURANCE RECORDS - Forever MILITARY SERVICE RECORDS - Forever TAX RECORDS - Seven years from filing date VEHICLE TITLES - Until the vehicle is sold WILL - Until the will is updated

iwanna.com

IWANNA速 TAX TIME SAVINGS --- January 28, 2014

IRS Offers New Tax Guide to Help Prepare 2013 Taxes

Taxpayers can get the most out of various tax benefits and get a jump on preparing their 2013 federal income tax returns by consulting a newly revised comprehensive tax guide now available on IRS.gov.

P

ublication 17, Your Federal Income Tax, features details on taking advantage of a wide range of tax-saving opportunities, such as the American Opportunity Tax Credit for parents and college students, and the Child Tax Credit and Earned Income Tax Credit for low- and moderate-income workers. It also features a rundown on tax changes for 2013 including information on revised tax rates and new limits on various tax benefits for some taxpayers. This useful 292-page guide also provides thousands of 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 web site 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 2013 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 and short Forms 1040A and1040EZ. -For more information, visit irs.gov

Page 19

Page 20

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

Financial Considerations For Those Nearing Retirement Retirement can simultaneously excite and distress men and women as they approach the day when they end their careers. Anticipating the freedom can be exciting, while concerns about maintaining financial independence can be stressful.

T

hough there are no guarantees that men and women who prioritize retirement planning will not outlive their finances, those who do arrange their priorities in such a manner are far more likely to enjoy a comfortable retirement without worrying about their finances. As men and women approach retirement age, certain steps with regard to preparing for retirement can put them in position to enjoy their golden years to the fullest.

n Assess your resources. An honest assessment of your assets will help you determine a retirement lifestyle you can afford. Assets can include any property you own, investments, savings, and retirement accounts. Your property may be your biggest financial asset, but unless you plan to sell that property or take out a reverse mortgage, then you won’t be able to rely on that property to fund your lifestyle.

When assessing resources, keep in mind that you might have to

pay potentially steep taxes when attempting to access any retirement accounts, such as a 401(k). Factor in any such taxes when assessing your retirement resources. n Make a list of your monthly expenses. Once you have assessed your resources, make a list of your monthly bills. Mortgage payments, healthcare costs, taxes, and food are among the essentials, while additional expenses like travel and entertainment will need to be factored in as well. When considering monthly expenses, keep in mind that some of those expenses, including mortgage payments and commuting costs, will likely disappear, while others, including healthcare costs, are likely to increase significantly. Once you have assessed your resources and expenses, you can then begin to paint a picture of the retirement lifestyle you can afford to live. n Compare the lifestyle you want to live versus the one you can afford to live. Considering your finances several years before you retire affords you the opportunity to make changes if you determine the retirement you can afford does not exactly match up with the retirement you want to live. After you have figured out what you can afford, compare that lifestyle to the one you hope to live. If they are one and the same, then you did a great job planning

Men and women must make a host of financial decisions as retirement draws closer.

for retirement. If they are slightly or significantly different, then look for ways to close that gap. If necessary, consult with a financial planner, who might be able to help turn your dream retirement into a reality. Closing the gap between your dream retirement and the one

you can afford to live may require you to work an extra year or two, so be prepared to make that decision if need be. n Plan on continuing to grow your money. Just because you’re retiring does not mean your money has to stop working as well. You will still need to combat inflation during your golden years, so plan on continuing to grow your money even after you retire. Though it’s best to reduce investment risks as you age, many retirees still need to keep a toe in the investment waters. Find a balance you’re comfortable with so your money continues to grow, but be conservative at the same time. As you grow older, continue to reduce your risk. While conventional wisdom long suggested retirees should completely eliminate risk from their portfolios, today’s retirees are living longer than ever before, so you likely can’t afford to follow the advice of yesteryear.

As retirement draws closer, men and women must start making important financial decisions to ensure their nest eggs can support the lifestyles they want to live throughout their golden years.

-Metro Creative Connection

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

How Homeowners Can Reduce Their Monthly Expenses Saving money is a priority for many people. But reducing monthly expenses is typically a bigger concern for homeowners, especially new homeowners adjusting to life with a mortgage, higher energy bills than they likely had while renting and other costs associated with owning their own homes.

H

ome ownership is a dream for many people, but the realization of just how expensive owning a home can be is often eyeopening once you get the keys and move in. Once the initial sticker shock has worn off, homeowners should know that the cost of home ownership need not be so steep. In fact, there are several ways homeowners can cut costs without drastically changing their lifestyle. n Combine your insurance coverages. Many lenders mandate that borrowers carry homeowners insurance for their homes. The cost of coverage varies from company to company, and one of the ways homeowners can reduce the cost of their homeowners insurance is to bundle their homeowners coverage with their auto insurance. Some companies provide discounted premiums as high as 15 percent for policy holders who combine their homeowners and auto insurance coverage. Speak with your current provider to determine if combining your coverage could save you money. If the savings are not significant, shop around for an insurance company that can offer you the lower price you desire. Just be sure the company is accessible and reputable. n Refinance your mortgage.

Refinancing your mortgage is another great way homeowners can save a substantial amount of money. Even if you only recently purchased your home, your lender might be willing to refinance your mortgage with a lower interest rate. Depending on the amount of time and money left on your loan, reducing your interest rate by 2 percent can save you a substantial amount of money on your monthly mortgage payment, which can add up to considerable savings on the total interest you will pay over the life of the loan. If you think your interest rate is a tad too high, consult your lender and discuss

refinancing at a lower rate. n Bundle your services. More and more consumers have decided to bundle their Internet, phone and television packages. Consumer Reports found that bundling just two of those services instead of buying them from separate providers can save consumers between 40 to 60 percent depending on where they live. Rates for bundling packages often come with an expiration date, but a Consumer Reports survey found that even those packages come with some wiggle room. In their 2011 Annual Telecom Survey, Consumer Reports found that one-third of survey participants attempted to negotiate a lower rate for their bundled services, and 90 percent of those efforts were successful.

When negotiating, discuss lower prices for bundling as well as extending the package beyond the current expiration date.It never hurts to ask, and one study has already shown that it actually helps to ask. n Go green. Going green benefits the environment, and it’s almost certain to benefit homeowners’ wallets. According to the U.S. Environmental Protection Agency, toilets account for more water usage in the home than any other appliance or fixture. But the EPA also notes that a family of four can save thousands of dollars by switching to a high-efficiency toilet over that toilet’s lifetime. And installing eco-friendly appliances or fixtures around your home might even make you eligible for certain tax breaks while also updating your home, something that will make the home more attractive to prospective buyers when you sell down the road. There are many ways to make a home more environmentally friendly, and nearly all of them can save you money over the long run.

-Metro Creative Connection

Refinancing an existing mortgage is one way homeowners can reduce their monthly expenses.

Page 21

Ta x Page 22

The 1040 form was introduced in 1914 with just one or two pages; in 2012 the 1040 form totaled more than 170 pages!

You can make big money reporting a company for tax evasion. It’s called the Whistleblower Informant Award.

From the IRS website:

••• The first-ever income tax was collected in 1404 A.D. The place — England. It was so hated that all records of it were burned. However, in 1798 Prime Minister William Pitt the Younger implemented income taxes to pay for weapons and equipment for the Napoleonic Wars.

Taxes have been a part of English life ever since.

iwanna.com

IWANNA® TAX TIME SAVINGS --- January 28, 2014

“The IRS Whistleblower Office pays money to people who blow the whistle on persons who fail to pay the tax that they owe. If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30% of the additional tax, penalty and other amounts it collects.”

So if you know something and want a clean conscience, you may actually be rewarded for coming clean.

••• If your child is a full-time student for 5 months of the year and is under 24 years old, he (she) may still be your dependent.

If you will owe taxes, don’t wait until you have the money to pay to file your tax return. The failure to file on time penalty is 5% per month! An extension gives you more time to file the return, but not to pay what you owe. You owe interest at 0.5% per month on the tax you owe beginning on April 15th and continuing until the tax is paid in full, no matter when you file the return.

The Child Credit is $1,000 per child age 16 and younger. This credit is refundable if the amount of taxes you owe is less than the amount of your credit.

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Generally, your dependent must live with you. Your parent is the exception to that rule. If you provide more than half the support of your parent, you may claim the exemption even though your parent does not live with you.

••• Pennsylvania’s alcohol tax was designed to help the city of Johnstown, which had a devastating flood in 1936. That tax is still collected and brings in $200,000,000 a year.

Many taxpayers age 70 ½ or older can transfer as much as $100,000 a year directly from their IRAs to qualified charities without having to count any of that transfer as income. The transfers count toward the taxpayer’s required minimum distribution for the year.

You can deduct up to $2500 of the interest paid on your student loan even if you weren’t the one who made the payments as long as you are legally responsible for the debt. (Phase-out rules apply.)

••• You know how everyone hates the taxman? Did you know that in 1789, the start of the French Revolution, tax collectors were sent to the guillotine? Poor folks were just doing their jobs… it’s not like they enjoyed it!

••• If you are taking a course at any accredited school, you may be able to take a credit on your return for the tuition you paid.

••• Our tax system has become so complicated that it is almost impossible to file your taxes correctly.

For example, back in 1998 Money Magazine had 46 different tax professionals complete a tax return for a hypothetical household. All 46 of them came up with a different result.

••• The United States is the only nation on the planet that tries to tax citizens on what they earn in foreign countries.

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