By getting to know basic tax regulations and deductions, you can save money over the long term.
By Barbara Friedberg, U.S. News & World Report
Around the time I stopped fighting with my parents and began listening to them, my dad imparted some brilliant financial advice. He told me to become a scholar of the tax law. OK, perhaps he didn't use those exact words, but the message was the same: Know the tax law and take every tax deduction to which you are entitled.
This advice stuck with me, and I'm certain it has saved me thousands of dollars.
The Internal Revenue Service website offers excellent resources to help you further understand the following tax deductions and credits. Study the credits well, as those benefits reduce your taxes dollar by dollar. In other words, if you owe $1,000 in taxes and receive a $150 tax credit, your taxes owed decrease to $850. That's an extra $150 in your pocket.
By spending a few hours each year keeping abreast of the tax law, you can save thousands on taxes over the years. In fact, keeping a tax reduction mindset in your everyday life will serve your finances well.
1. Retirement account contributions are the top tax-reduction tips as they serve two purposes. Most contributions (except the Roth individual retirement account) allow you to deduct from your taxable income the amount paid into the retirement account. This reduces your total taxable income. Further these funds grow tax-free until retirement. If you start early, this strategy alone can secure your retirement.
Two Georgia men plead guilty after using attorney general's name, birthday and Social Security number.
Not even the nation's top law-enforcement officer is safe from the growing number of fraudsters filing false tax returns based on stolen identities.
Two Georgia men filed a tax return with the name, birthday and Social Security number of Attorney General Eric Holder in hopes of getting his refund, according to federal prosecutors in Atlanta. Holder was one of several people targeted by Yafait Tadesse and Eyaso Abebe, both of whom have pleaded guilty to charges related to the scheme.
Despite the marriage bonus most couples see at tax time, some upper- and lower-income people pay more taxes because they're married. Here's why.
This post comes from Allison Linn at partner site CNBC.
Some wealthy and low-income married couples are losing out at tax time, but experts say eliminating the so-called marriage penalty is more complicated than you might think.
"It's just impossible to get rid of it with the tax system that we've got," said Roberton Williams, senior fellow at the Tax Policy Center think tank.
That's because the U.S. tax system is progressive, meaning that people pay more taxes as their incomes go up, and also factors in whether people are married or single when it comes to filing taxes.
Williams suspects that more couples get a marriage bonus than a marriage penalty, meaning that their overall tax bill is lower because they are married. But he said there's no question that some people would have a lower tax bill if they were single instead of married.
And despite an effort in the early 2000s to decrease the group of people subject to the marriage penalty, some couples are still caught by it.
Even when they have a plan for their refund check from Uncle Sam, Americans often don't realize how they actually spend the windfall.
By Allison Linn, CNBC
When it comes to tax refunds, many Americans say they plan to do something virtuous with the money they get back from Uncle Sam, like pay down debt or put it in the rainy day fund.
We're not completely fooling ourselves: Experts say people who plan to save their refund or use it to pay off bills do that — with at least part of the money.
But whether we realize it or not, having a little extra money in the checking account also often leads to a splurge or two, like a new pair of shoes or a nice dinner out.
"You also find significant spending among households who say they're saving it," said Jonathan Parker, a finance professor at MIT's Sloan School of Management who has studied how people spend money they get back from the government.
It's not clear whether people are aware that they are spending a bit more than they otherwise would have. Parker said people may just see that their bank balance is a bit higher, or know that they just deposited that big check, and feel comfortable spending a bit more even a month or two later.
"It actually caused spending, even though you think you saved it," he said.
For many Americans, a tax refund is a significant financial boost. The Internal Revenue Service said last week that it had issued more than 40 million refunds already this year, and the average refund so far is $3,116.
Americans can kill two birds with one stone by filing their taxes and buying health insurance at the same time.
This post comes from Krystal Steinmetz at partner site Money Talks News.
The Obama administration has found a new ally in its quest to help uninsured Americans buy individual health insurance under the Affordable Care Act, also known as Obamacare.
Tax return customers of H&R Block and Jackson Hewitt Tax Service are also getting free help applying for health insurance.
After taxpayers are done with their returns, H&R Block helps them estimate what their premiums would cost if they were to qualify for a premium subsidy tax credit to help lower insurance costs and to calculate how big a penalty they will have to pay if they lack insurance coverage. People who want to shop for insurance are connected with agents from GoHealth LLC, an online insurance broker who can help them compare plans and apply for insurance on HealthCare.gov. …
People who get their taxes done with Jackson Hewitt Tax Service can get help filling out an application for Medicaid and are given the option of calling a broker at GetInsured, a private health insurance exchange, for help filling out an application on HealthCare.gov.
Meanwhile, TurboTax has provided an online tool to walk people through a similar process, it explains in this blog post.
Most couples file jointly. But under some circumstances, separate returns may be the best way to file.
By Alden Wicker, LearnVest
One of the very first things you'll choose this tax season is your filing status, which determines the deductions and credits you can take.
Generally, there are two common filing statuses: married filing jointly and single. But it's a third, less common status that we'll be discussing here: married filing separately.
As with most things tax-related, choosing whether to file jointly or separately as a married couple is a highly individual and complex decision. That's why we consulted two certified public accountants to find out how common it is for a married couple to file separately, what it means for your taxes and in which situations it may apply.
What does it mean to file separately?
If you were legally married as of Dec. 31, 2013, then you have two choices for your filing status this year: married filing jointly and married filing separately.
Married filing jointly means you file one return as a unit, with your incomes and expenses lumped together for the purpose of calculating and paying taxes.
Married filing separately is not the same as filing as a single person. It means that you're married, but you each file your own return. You don't take legal responsibility for your spouse's return, and your incomes and expenses are considered separately. The federal government now recognizes same-sex marriages, which gives married same-sex couples this same choice between filing statuses.
Still haven't filed your tax return? Take precautionary measures to reduce the likelihood of your refund being stolen.
This post comes from Allison Martin at partner site Money Talks News.
Have you already started making plans for this year's tax refund? I hope everything works out as you planned and that your refund isn't snatched up by someone else.
MarketWatch says the Internal Revenue Service's Identity Theft Protection Specialized Unit received about 450,000 cases last year -- 78 percent more than 2011. The IRS also stopped $20 billion in fraudulent refunds in 2012.
Take a moment to reflect on the situation down here in the Sunshine State, where hundreds of millions of refund dollars have been taken by thieves in recent years.
I know personally of at least 10 cases where people went to file their return, only to find out that someone had beaten them to the punch -- collecting a refund to which they were not entitled by using the victim's Social Security number and name. All of the other information provided was false, but good enough to sneak right past the vigilant gatekeepers at Uncle Sam's headquarters.
Wondering if you will fall victim to the stolen refund scam? Here are a few indicators that you may not be adequately protecting yourself.
While nobody expects the 979-page draft to go anywhere, the move is at least sparking some reform discussion in Washington.
For a plan labeled dead on arrival before it had actually arrived, Rep. Dave Camp's proposal to overhaul the bloated U.S. tax code has caused quite a stir both in Washington and across the country.
The 979-page "discussion draft" put out by the House Ways and Means chairman (pictured) on Wednesday has little chance of becoming law, with neither party willing to stick its neck out on such a central pocketbook issue, particularly in an election year.
The fact is, though, that Camp has started a debate that everybody agrees needed to begin, but that nobody else had the guts to initiate.
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