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Taxes

Aug 11
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5 things every Woman should know about … their Finances!

By Credit, Debt Management, Estate Planning, Insurance, Investments, Money Management, Retirement, Saving, Taxes No Comments
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Three in four adults agree that they could benefit from guidance and answers to everyday financial questions from a professional, do you agree with them too?1

Since women control or influence the handling of the household finances, here are five things every woman should know about their finances, including a few tips from New York Life to get you started on the path to Financial Freedom.

#1 Maximize your tax credits 2:

Each year the deductible amount you can contribute to a retirement account is increased for inflation, and there are catch-up contributions for those 50 or over.

  • You can receive a $1000 tax credit for each of your qualifying children, in addition to each dependent’s personal exemption. Don’t forget to take this credit-it’s like receiving $1000 tax-free in your pocket, as long as your income doesn’t exceed the limitations.
  • The child and dependent care credit will cover up to $3,000 of qualifying expenses if you pay a babysitter or day care center so you can work or go to school.
#2 Become a S.M.A.R.T. spender:

Set S.M.A.R.T. financial goals (Specific, Measurable, Achievable, Realistic and Time bound) and create a spending plan in 4 steps3:

1. List your income

2. Compare your income and expenses

3. List your expenses

4. List your resources and set priorities

#3 Develop a savvy investment strategy:

Finding the right mix of investments depends on your available assets, your financial goals, your time horizon, and your tolerance for risk. It is important to ensure a balance between three things: liquidity, return, and risk. Start systematically investing as soon as you are able so that a reasonable amount is saved, even after just a few years. The compounding effect can help to speed up your savings4.

#4 Know your credit score:

Based on the factors below you are assigned a credit score between 300 (low) and 850 (outstanding). Here are the main areas in which you are graded and given credit scores, and the approximate weight that each area is given5:

  • Payment history: 35%
  • Outstanding debt: 30%
  • Credit history: 15%
  • New credit and types of credit: 20%
#5 You are your most important asset:

For most people, human capital is the missing piece of their portfolio. You insure your car, in the event you get into an accident. You insure your belongings, in case they’re lost or stolen. Your biggest asset is your ability to get up every day and provide for your family, whether by working or being the primary care giver. How do you insure your biggest asset? Through life insurance products.

A financial professional is trained to help you select and recommend vehicles that are suited to your protect your specific needs. You might find that working with a trained financial professional can help you to make well-informed decisions and stick with your financial plan — it is important that this is someone you are comfortable working with.

Click here to learn more about how New York Life can help you educate yourself on financial matters and set you on the path to a secure future.

Article by New York Life Insurance Company:

1 The 2014 Consumer Financial Literacy Survey, The National Foundation for Credit Counseling, http://www.nfcc.org/NewsRoom/FinancialLiteracy/files2013/NFCC_2014FinancialLiteracySurvey_datasheet_and_key_findings_031314%20FINAL.pdf

2 http://www.wife.org/taxstrategiesforwomen.htm

3 http://www.pacer.org/publications/possibilities/make-a-spending-plan/68-make-a-spendingplan.html

4 Systematic investment techniques do not assure a profit or protect against a loss.

5 http://www.wife.org/features_bottomline_creditscores.htm

Mar 06
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Education Tax Credits and Deductions Often Overlooked

By Student Loans, Taxes No Comments
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Excerpt from Sallie Mae‘s Press Release

Last year, the federal government provided more than $15.6 billion in education credits and deductions with families receiving an average of about $1,200 according to The College Board. Yet, according to “How America Pays for College,” an annual study conducted by Sallie Mae and Ipsos, less than half of American families used tax credits and deductions as a way to help cover tuition costs.

education tax credits“Families tell us they don’t want to spend more on college than necessary,” said Martha Holler, senior vice president, Sallie Mae. “Higher education tax deductions and credits are an effective way to reduce your college costs, so study up and claim yours this year.”

Sallie Mae recommends students and families explore these various tax options in order to capitalize on savings.

  • The American Opportunity Tax Credit. Eligible taxpayers may qualify for a maximum annual credit of $2,500 per student. To be eligible, the student must be enrolled at least half-time in a degree or other recognized educational credential, and cannot have completed the first four years of postsecondary education before 2014. The credit can be applied to course-related books and supplies, in addition to tuition and fees. The American Opportunity Tax Credit is available to taxpayers with a joint adjusted gross income as high as $180,000.
  • The Lifetime Learning Credit. Eligible taxpayers may qualify for up to $2,000 per tax return to help pay for undergraduate, graduate and professional degree courses – including courses designed to improve job skills. There is no limit on the number of years an individual can claim the Lifetime Learning Credit. The Lifetime Learning Credit is available to taxpayers with modified adjusted gross income less than $64,000 or $128,000 if filing jointly. A family may not claim more than one credit for the same student in any one year.
  • Student Loan Interest Deduction. Student loan borrowers are eligible for up to $2,500 in student loan interest deductions to offset income subject to tax. Available for both federal and private education loans in repayment, those with a joint modified adjusted gross income less than $160,000 qualify for this deduction.  In 2012, 10.8 million taxpayers deducted $10.7 billion in student loan interest, generating about $1.7 billion in tax savings.
  • Tuition and Fees Deduction. Students and families can use up to $4,000 in expenses for higher education to offset income subject to tax.  This deduction is taken as an adjustment to income, however, an individual does not need to itemize other deductions. Individuals can file for this deduction with a joint modified adjusted gross income of up to $160,000.

When it comes to paying for college, Sallie Mae recommends families follow its 1-2-3 approach: first, maximize money that does not need to be repaid such as scholarships and grants; second, explore federal student loans; and, third, consider a responsible private education loan.

Click here to read complete Press Release