The Tax Deadline Is Only Two Weeks Away

Tax DayAre you ready to join the mad rush to the tax deadline or did you finish your return early? There’s about two weeks left to get your return finalized, signed, and sent to the IRS. With that in mind, I’ve put this reminder together with info to help you make the most of your refund and get that tax return in on time.

The Deadline Is Here

Once again, April 15th is the deadline fast approaches. That’s the day your tax return and any taxes owed are due. Or, you can file a tax extension, to get an extra six months.  Even with an extension, the IRS still wants that money paid by the deadline. Continue Reading…

Choose The Right Default Cost Basis Method

Default Cost Basis MethodDid you know you might be overpaying capital gains tax on investments because of tax rules that went into effect in 2011? Those new rules changed the way we report capital gains and losses on investments. Under the old rules, it was your job to report cost basis, that’s what you paid for the investment, to the IRS. With the new rules, its your broker’s or fund company’s responsibility.

Before the rules change, lets just say not everyone was truthful about their gains. The honor system doesn’t work well with taxes. Putting the onus into the brokers and fund companies hands adds a layer of protection for the IRS.

Instead of number crunching your way to lower taxes at year’s end, you now need to calculate cost basis at the time of sale. That involves tracking your profits/losses, so you can pick the cost basis method that gives you the best tax savings for the year, without hurting you later on. Continue Reading…

Deciphering Form 1099-B

One of the more confusing tax forms for investments is form 1099-B. Tax lingo is part of the cause. It’s like a foreign language at first sight. The tax code, and changes to it, cause the rest. It’s up to you to decipher what the 1099-B says.

Brokers and fund companies send form 1099-B when you buy or sell an investment, like shares of a mutual fund or stock. The form is a record of those transactions. When you plug the information into a Schedule D, you and the IRS can figure out your capital gains or losses for the tax year.

Of course, you owe taxes on capital gains, either short or long-term capital gains tax, based on how long you owned the investment. However, capital losses are used to offset gains or income and lower your tax bill. Continue Reading…

Saver’s Credit: Extra Credit For Retirement Savings

Saver's CreditThe tax code is full of ways to lower to your taxes. The Saver’s Credit (formerly the Retirement Savings Contribution Credit) is a tax credit for something we should be doing anyways, saving for retirement. This is on top of the great tax benefits already offered by retirement plans. With a little tax planning you can turn this tax credit into big savings.

What Is It?

The Saver’s Credit helps those taxpayers who save for retirement but are on the lower end of the income scale. Consider it a reward for being a responsible saver, in that it helps offset part of your contributions each year.

Here’s how it works. The Saver’s Credit offsets 50%, 20%, or 10% of the first $2,000 ($4,000 if married filing jointly) of your retirement contributions each year. That gives you up to a maximum tax credit of $1,000 ($2,000 if married filing jointly) each year. Continue Reading…