7 Tax Planning Ideas That Offer Big Savings

Tax Planning TipsDid you get the most tax savings possible this year? Is there anything you could have done differently that would have saved you more money? I bet there was.

You need to be proactive for big tax savings. By the time April rolls around it’s already too late to work the tax code in your favor. The only planning you have left is a last-minute IRA contribution before the deadline to salvage some savings.

Real tax planning is an ongoing process of making small financial changes that lead to big tax savings year after year. You need a plan for that and our extensive tax code offers up some places to start. Continue Reading…

How Long Should You Keep Tax Records?

Tax RecordsTax season is stressful enough just getting those returns finished and sent in time. Now you have to deal with storing all those tax records. Or do you?

The good news is you don’t have to be a hoarder. But before you start force feeding that shredder, there are some tax documents you should hold on to for a little while.

If you’re like me, you may be holding on to tax records out of fear the IRS will show up for an audit or maybe it’s just a keepsake of incomes past.

The hard part is deciding what records should be kept, what is junk, and how long it all needs to take up space. The IRS, of course, has all the record keeping specifics you’ll ever need. Continue Reading…

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…