Why We Gave Away Our Inheritance Money When we tell people that we gave away our inheritance money, they often look at us like we are crazy. This happens despite the fact that we don’t even disclose the amount of money we declined. Yet the idea that one would turn away a large lump sum […]
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If you are a business owner, check out this great information from Create & Cultivate about 13 Things You Didn’t Know You Could Write Off. Be sure to consult with your Tax Professionals for details regarding these and other tax strategies.
Tax season is officially here. Before you start panicking about getting your receipts together and setting an appointment with your tax preparer, we’re here to help ease some of the stress before you even make the call. Sure, taxes can be a drag, (or something to look forward to if you know you’re bound to get a tax refund), but if you’re like most independent contractors or freelancers, you might have to owe a hefty amount of money back to your state and the IRS.
However, there are so many things tax payers fail to claim in their yearly taxes that could definitely help ease the fees that you owe back. To help you get a tax break, we’ve listed some of the most overlooked write-off items that people fail to claim.
If you contribute to your community and help with charitable work, or give charitable donations that include out-of-pocket costs, your good deeds may be rewarded with a tax write-off. If you’ve donated food for a soup kitchen, bought clothes for a women’s shelter, or even driven your car for charity, make sure to keep those receipts as they can work as a great tax deduction.
Job hunting can be time consuming, and without realizing it, you spend money heading from interview to interview. If you’re unemployed, and you’ve spent money on transportation, printing new business cards or resumes, or have paid a hefty amount to an employment agency to help you land a job, you can definitely deduct these and other qualifying expenses this tax season.
Once you’ve moved past the job hunting phase and have landed your dream job on the other side of the town, or even the other side the country, you’ll need to move closer to your job. If you’re moving farther than 50 miles away, you can write-off your moving expenses this season, including transportation.
If you have to leave your child, who is filed as your dependent under 12 years of age, with a sitter or at a daycare while you’re at work, your child care expenses can serve as a tax credit, up to $3000.
If you are going back to school to sharpen your skills, are taking special courses for work, or have bought literature (books or magazines) that are relevant to your field of work, make sure to mark these as your “smart taxes.” Which, goes to show that any money that you spend on your education is always an investment.
Did you know you can get those annoying baggage fees right back into your pocket? Save the airline receipts from any checked baggage that you had to pay for, and mark them as a deduction when you file.
If you’re eco-savvy and have turned your house into an eco-friendly home in the past year, you can be rewarded with a great tax credit for your improvements. We know you went for paperless last year, but in this case you might want to keep those paper receipts.
If you have a financial advisor, tax preparer, or even paid to use a program like Quickbooks or Intuit to manage your finances and taxes, you can deduct those fees for the year in which you payed for them. If you still have your receipts from paying your preparer or the programs that you bought, make sure to include those in on your deductions!
If you’re a boss lady of your own and are paying your own bills, like your own healthcare, then make sure include … (continue reading 13 Things You Didn’t Know You Could Write Off by Create & Cultivate)
If you work full time, you know how hard it is to keep up with all the little things outside of your job. But have you tried putting your lunch break to good use? Instead of spending the hour chatting at the watercooler while you munch on a snack from the vending machine, grab something healthy and use the rest of the time to tackle some important odds and ends – like your finances. Below, we share 13 tasks that you can accomplish over lunch that will help you build a better financial future.
Check your budget from time to time so that you can visualize the progress you’re making toward paying down debt or saving. Make it a habit.
“This will help you stay on track and help you feel motivated to keep working hard toward reaching your goal,” said consumer finance expert Andrea Woroch.
She suggests using an app like Mint, which links all of your financial accounts in one place and provides a real-time snapshot of your spending and saving habits.
Rather than just thinking about your financial goals, write them down in a diary or on a vision board. “You’re more likely to stick to your budget if you write down your plans and are specific,” said Marshay Clarke, a certified financial planner at Betterment, a financial advisory site. Make sure to revisit your goals periodically to stay on track.
You’re more likely to save money if you have somewhere to put it. During your lunch break, you can easily open a savings account at your current bank or with an online bank that offers a high-yield savings account. While you’re at it, set up a recurring monthly transfer from your checking account for automatic savings.
There are apps that help you save and take minutes to set up. Dr. Elizabeth Dunn, co-author of the book “Happy Money“, is an adviser for the Joy app and their free FDIC-insured savings account. The app allows users to automatically save extra cash without having to do much extra work. “This is important because just adopting the goal to save money doesn’t seem to change people’s financial behavior,” Dunn said. “But getting a little nudge to save a manageable amount of money can make a difference.”
Other apps that allow you to save incrementally are Digit and Qapital. Digit will recommend how much you should save, based on your spending habits and financial obligations, whereas with Qapital, you create your own saving rules.
If cash is really tight, or you want to save for a large purchase, maybe it’s time to pick up a side hustle with Fiverr or TaskRabbit. Plenty of people have been known to use their lunch hours to pick up riders as Uber or Lyft drivers, too. Put those extra funds toward a future goal, like a vacation or down payment for a new home.
If something unforeseen should happen in your home, like a fire or a robbery, do you know what you’re covered for? If not, take a few minutes to find out so that you’re not caught off guard should something occur. No insurance? Research policies online over lunch.
Knowing your credit score is important because it can positively or negatively affect your ability to secure a loan, qualify for certain credit cards and, in some cases, get a job. A free service like Credit Karma or Credit Sesame will monitor your score and send you emails if something is amiss.
Use an online retirement calculator to determine if you are saving enough for your long-term goals. If you’re falling short, consider increasing your 401(k) elections from your paycheck, or set up an automatic deposit from your bank account to your investment account.
Also, check your retirement account online and make sure your beneficiaries are in order. It only takes a minute to add a beneficiary and you’ll have peace of mind that your funds will go to the right person(s) if you were to pass away.
Review those subscriptions you’re being billed for each month. You might be paying for things that you rarely, or never use. If those New Yorker magazines are piling up, or you can’t remember the last time you listened to Amazon Music, it might be time to cancel.
Call your phone or internet provider to see what promotions they are offering. Or, contact your credit-card provider about a possible APR reduction. If you have good credit, you might be in luck.
Do you blindly pay your credit-card bills each month? Even if you use autopay, you should take a few minutes each month to scan your statements to ensure that all of the transactions belong to you and are accurate.
Take a walk or attend an exercise class. Health care is expensive, and the better you take care of yourself, the better your chances of avoiding costly medical bills. Some life insurance providers offer reduced rates to customers who show a certain level of fitness activity on their fitness trackers. Fitness can pay!
Skip the digital Solitaire or Candy Crush and read a financial book, like The Wisdom of Finance by Mihir Desai. Doug Kinsey, certified financial planner and Partner at Artifex Financial Group, enjoyed the book so much that he took Desai’s Harvard HBX Course, Leading with Finance, which you can complete online.
“Another helpful HBX course is Economics for Managers,” said Kinsey. “Either one of those courses will help almost everyone by providing greater insight into how the world works from an economic and financial perspective.”
Clarke recommends the financial books Rich Dad Poor Dad, by Robert T. Kiyosaki, and A Random Walk Down Wall Street by Burton G. Malkiel. So take a look at those, too.
Also check out the financial book Financial Fornication by Tarra Jackson.
MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.
Originally appeared on WWLTV.com.
Have you ever wondered why some people are more determined to get out of debt than others? After interviewing over 200 debt-free people on our podcast, The His and Her Money Show, we pulled some very common habits that a lot of the stories had in common. 10 Habits of Debt-Free People 1. Stick to […]
The post 10 Habits of Debt Free People appeared first on His & Her Money.
On Saturday, January 13, 2018, Madam Money presents the 4th Annual #WomensWealth B.O.S.S. (Business Owner Success Strategies) Brunch to educate, empower, and engage women entrepreneurs and professionals. The event will take place at Clyde’s at Gallery Place in Washington, DC from 9am – 3pm.
Women entrepreneurs are ever growing enterprises globally. Although influential, women entrepreneurs and professionals face unique challenges and require special solutions that accommodate their lifestyle and family. Many women entrepreneurs are SOLOpreneurs (Sole Proprietors / Self Employed) or DUALpreneurs (Full-Time Professionals who are Entrepreneurs) and have the same challenge: TIME.
#WomensWealth BOSS Brunch Founder, Tarra Jackson, aka Madam Money, and host Recharge Specialist Chere M. Goode, will feature expert speakers and a Powerhouse panel on Building a 7-Figure Success Team to Increase Profits in 2018. Keynote speakers include International Speaker Cheryl Wood, Sales Cardiologist Che Brown, and the Billion Dollar Brand Man Trevor Otts, as well guest speakers Michael A. McFadden, Lachelle Barnett, Crystal Marie Young-Lewis and Erica Reed.
BOSS Brunch is excited to announce media partner Upscale Magazine.
The event will take place at Clyde’s at Gallery Place, 707 7th Street NW, Washington, DC 20001. Purchase Tickets at special rate of $79.00 using Promotional Code BOSS (Normal Ticket $99.00 per person). For more information, go to www.bossbrunch.net.
If you’ve got a pressing financial concern and money in your 401(k), you may be tempted to take the cash out by taking a 401(k) loan. After all, the money is just sitting there, you’d be paying interest to yourself if you took out the cash, and you may have plenty of time to put the money back before retirement.
While it can theoretically seem like a smart financial move to use that money to pay off high-interest debt, put down a down payment on a house, or fulfill another immediate need, you should resist the urge and leave your 401(k) cash right where it is. The money already has a job — helping you afford food, housing, and medicine when you’re too old to work — and the only reason you should ever take it out is for a true life-and-death emergency.
Here are four big reasons why you should leave the money in your 401(k) alone so you don’t have major regrets later.
When you take a 401(k) loan, you typically must make payments at least once per quarter and must have the entire loan repaid within five years, although there are exceptions such as a longer repayment period if the money you borrow is used as a down payment for a primary home.
If you are not able to comply with the repayment rules, the entire unpaid amount of the loan becomes taxable. Plus, if you’re under 59 1/2, you will not only have to pay federal and state taxes on the money you withdrew but will also have to pay a 10% penalty for early withdrawal.
Depending upon your federal tax bracket and state taxes where you live, your total tax bill could be around 40% or more of the amount withdrawn; for example, if you were in the 25% federal tax bracket, paid 8% California state tax, and paid a 10% penalty for withdrawing money early, you’d owe 43% in taxes. If you borrowed $10,000, the government would get $4,300 and you’d be left with just $5,700.
That’s a really high effective interest rate — so you’re taking a big gamble that you’ll be able to make all the repayments without a hitch.
When you leave your job and you have an outstanding 401(k) loan, you typically have to pay the loan back right away or your employer will alert the IRS and taxes and penalties will be triggered. The specific length of time you have to pay can vary from plan-to-plan, but 60 days is typical.
This means that unless you have the cash, you’re left with a choice between sticking it out at your job until you’ve repaid the entire balance — which could take years — or paying a hefty sum to the government. You could be forced to forego career opportunities to avoid the tax hit… assuming you actually have a choice about whether you leave your job and don’t get laid off first.
If you are let go, you’ll still be forced to repay the loan or pay taxes. This could mean coming up with a lot of cash right when you’ve lost the income that your job was providing.
When you have money invested in a 401(k) and you take a loan against your account, the money for the loan is typically taken out in equal portions from each of your different investments. If you’re invested in six different funds, one-sixth of the value of the loan would be taken from each.
During the time that your money is pulled from your account, you’re not making any investment gains. If you took a $10,000 loan from your 401(k) 20 years before retirement, took five years to repay the loan at 5% interest and were earning 8% on your investments, you’d lose about $2,625 in earnings, assuming you repaid the loan on time.
Of course, you could lose much more (or much less) depending upon the movement of the market. If you took a 401(k) loan during the financial crisis in 2008 and sold all of your investments when they were way down because of the market crash, you’d likely have had to buy back your investments at a much higher price and would have missed out on much of the market recovery.
And, of course, there’s also a risk that you won’t put the cash back at all… which could end up costing you decades of compound interest and which could result in that $10,000 loan having a price of more than $62,000 by the time you reach retirement age, if you took out $10,000 20 years before retiring and never paid it back.
When you repay the money from a 401(k) loan, you do so with after-tax dollars (rather than with pre-tax money, like with your individual contributions). When you take the money out of your retirement account as a senior, you’re taxed because no distinction is made between the pre-tax contributions you made to the account and the after-tax loan repayments. You’re forced to pay taxes twice: once when the money went in and once when it come out — which can cost you thousands.
To make matters worse, interest on a 401(k) loan isn’t tax deductible, so if you’re borrowing money toward a house or if you’ve taken cash out of a 401(k) to repay student loans, you’re not even getting a mortgage interest deduction or taking advantage of the tax deduction for student loan interest that you would likely otherwise be entitled to take.
You’ll also have to pay fees, in most cases, to take a 401(k) loan. These fees can be higher than the costs associated with a conventional loan.
Originally appeared on Money.cnn.com.
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