Quizzle Wire » Taxes

Mixed Emotions – Finance, Obama, Gay Marriage and Quicksand

Michael Adain Carroll — Thu, 10 May 2012 17:14:05 +0000

Above all things I am a pragmatist. As a political operative, like a spy, a good businessperson, a sound financial adviser or an undercover cop, the ability to divorce yourself from the emotional ties that often encumber good judgment is one of your greatest assets.

President Obama’s, until very recent, opposition to gay marriage is a blue ribbon example of emotions driving policy making decisions. The same goes for those voters in North Carolina. The word marriage is something wholly inseparable from our emotional constitutions. It involves the ephemeral and indescribable feeling of love, at least it should, and pragmatism gets tossed out the window when we discuss matters of the heart. The same holds true for opponents of the ban, their philosophical foundation rocked by the notion that any government policy would prevent someone from loving another person. And this is where the same-sex marriage debate gets mired in a quicksand pit of its own making.

To this writer, from a purely pragmatic perspective, the gay marriage issue is a financial issue. Were you to, forgive the pun, but divorce the word marriage from the debate and start passing pieces of legislation that allowed gay couples to file joint tax returns, make health care based decisions for one another, buy a house together, etc… I don’t believe the voting public would rally around an opposition to those things. Toss the word marriage in there and the situation goes nuclear, pushing everyone on either side of the debate to an emotional DEFCON 1.

The fact of the matter is, marriage is a religious, not public policy term. The government’s use of the term marriage is to define the financial situation of taxpayers, hence the term ‘common law marriage’ applied to live-in heterosexual couples who for all intents and purposes are ‘married’ but haven’t taken vows, knelt in a church or engaged in the chicken dance in front of family and friends over cooling plates of prime rib and empty cocktail glasses. Culture, not government defines marriage. We would all do well to remember this in an effort to tamp down the rhetoric. But, it’s an election year so who am I kidding.

In the world of your personal finances, cold hard rationalizations are what are going to keep you secure and financially safe. We don’t invest in company’s because we like the name, or give our friends $10,000 because they are our friends and they think they’ve invented the next Shamwow in their garage. You don’t buy a house you can’t afford because the window treatments are pretty and the tire swing reminds you of grandma’s farm. You may want to, but you don’t.

Now for the payoff as I graciously thank you for your attention during my diatribe. With a housing market still plump with quality, cost-friendly property’s, many people are seizing this moment to jump into the home owning game. But all this talk of marriage got me thinking, what if you’re not and you want to buy a house with someone, anyone, that you’re not joined to in financial government sanctioned matrimony. Can you get the same tax benefits, protections?

We say it over and over on the Quizzle Wire, but reality is repetition you’ve finally stopped ignoring. If you want to buy a house, are even casually thinking about it, check your credit. Too often first time, and second time for that matter, homebuyers realize all too late that their credit needs improvement to secure a sensible home loan. Credit scores can improve, but it takes time and discipline.

So if you want to buy a house with a partner, check your credit and then watch this video before you sit down to discuss this with you’re potential co-buyer. And remember, love and money – like emotions and public policy – never mix.

Mixed Emotions – Finance, Obama, Gay Marriage and Quicksand was originally featured on Quizzle Wire

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Is it too late to file my taxes?

Benjamin Gran — Tue, 17 Apr 2012 13:00:29 +0000

Are you worried about filing your taxes at the last minute?

Don’t worry! There is still time. Even if you’ve waited until Tax Day (April 17, 2012) to file your taxes, you can still get the refund you’re waiting for (or avoid paying penalties on the taxes you owe).

Here are a few tips to avoid penalties:

File your taxes today, even if you need to file an extension. If you aren’t ready to file your taxes today, you can file an extension which gives you an additional six months to complete your tax return. Filing an extension on your taxes helps you avoid a “failure to file” penalty of 5% per month that the tax return is late.
HOWEVER: if you owe taxes, even if you file an extension you will have to pay a late payment penalty of 0.5% of the unpaid tax, per month, up to 25% of the total taxes owed.

Here is a great infographic from H&R Block with some more last minute tax tips.

Is it too late to file my taxes? was originally featured on Quizzle Wire

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Quizzle Weekend Roundup: Tax Breaks

Benjamin Gran — Sat, 14 Apr 2012 14:00:44 +0000

Tax Day 2012 is just around the corner – Tuesday, April 17, 2012 is the deadline for filing tax returns.

No one likes to pay taxes, but with careful planning and accurate record-keeping, you can minimize your tax bill by taking advantage of the various tax breaks, tax credits and tax deductions available to you (if you qualify).

Here are a few of our favorite personal finance articles from the Quizzle blog with tips and advice on how to save money on taxes and maximize your tax refund.

Quizzle Weekend Roundup: Tax Breaks was originally featured on Quizzle Wire

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Quizzle Weekly Must-Reads: April 13, 2012

Benjamin Gran — Fri, 13 Apr 2012 19:25:50 +0000

Economic News that Affects Your Budget:

More foreclosures coming soon: Lenders are sitting on a backlog of over 1 million home foreclosures that have been delayed due to regulatory hiccups and paperwork problems, but those foreclosures are expected to start soon. This means that housing prices could fall further, since more foreclosed homes will be added to the housing market.
Gas prices may fall: Oil industry analysts say that the global supply of crude oil (which makes up 70% of the price of gas) might be sufficient to avoid any further run-ups in gas prices. This is good news for consumers who have been paying big money at the pump.
Tax Day 2012 is April 17: Usually the deadline to file taxes is April 15, but since April 15 falls on a Sunday this year, and since April 16 is Emancipation Day (a holiday observed in Washington, D.C. to commemorate the freeing of the slaves), the 2012 tax deadline for filing tax returns is Tuesday, April 17.

Quizzle Links of the Week:

Win $100 and a year of free credit monitoring from Quizzle! We’re hosting a contest! Learn more about how you can win $100 and a year of increased peace of mind about your credit.
Dating and Money: It’s all about honesty. If you’re getting into a serious dating relationship, make sure you can be open and honest about your financial lives as well. If you’re thinking of moving in together, getting married and starting a life together, you need to know where each of you stands with money.
Talk to your kids about money: Many teenagers aren’t getting the information and financial advice that they need to make smart financial decisions. Here’s how you can talk with your kids about money.
Is getting a tax refund a bad thing? Many Americans look forward to their annual tax refund, but surprisingly enough, getting a check from Uncle Sam may not be the best financial move.

Quizzle Weekly Must-Reads: April 13, 2012 was originally featured on Quizzle Wire

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Is getting a tax refund a “bad thing?”

Benjamin Gran — Tue, 10 Apr 2012 14:00:37 +0000

About 75% of U.S. taxpayers get a tax refund each year, and the average tax refund is $3,000. Most people see their tax refunds as “free money,” or at least a cause for celebration – but most financial experts say that if you’re getting a big tax refund, that’s not entirely a good thing.

Here are two reasons why getting a big tax refund can be bad for your personal finances:

You’re letting the government keep too much of your money. Your tax refund isn’t “free money,” it’s your money that was withheld from your paychecks all year long. Since you didn’t owe that money in tax, you could have kept more of it for yourself throughout the year.
You could have earned interest. Instead of letting the government hold your money all year, if you didn’t get such a big tax refund you could have invested that money in a savings account or even stocks and bonds.

Of course, getting a tax refund isn’t all bad. It gives you a sudden boost of cash that you can use to pay down debt, add to your emergency savings or save for retirement. Just don’t spend your tax refund all in one place!

Is getting a tax refund a “bad thing?” was originally featured on Quizzle Wire

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3 Ways You Could be Affected by the Payroll Tax Bill

Stephanie Hamilton — Fri, 24 Feb 2012 14:48:34 +0000

Recently, Congress passed another extension of what’s come to be known as the Payroll Tax Holiday. It’s a 2 percent reduction in Social Security tax taken out of an employee’s wages. The extension was passed with much less bickering and fanfare than last year, for a variety of reasons that we won’t get in to.

What we will explore, however, are the three ways you may be affected by this new legislation.

No Middle-Class Tax Increase

If the Payroll Tax Holiday had expired, the Social Security taxes withheld from wage earners would have increased from 4.2 percent to 6.2 percent. For someone who earns $50,000 a year, this equates to a $1,000 savings. The Social Security tax employers have to pay remains unchanged.

In addition, there is a wage cap on Social Security taxes. Any income you earn over that amount is not subject to the tax. In 2011 the cap was $106,800. This year the cap has increased to $110,100. So, if you earn $150,000 in 2012, $39,900 of your income will not incur the Social Security tax.

Shorter Unemployment Benefit Term

Another important change is to unemployment benefits. Currently, the unemployed are allotted 93 weeks, or about a year and 9 months, of unemployment checks. Under the bill just passed by Congress, that number decreases to 63 weeks, or about a year and three months.

The only exception is for states whose unemployment rates are unusually high. Those states will see a gradual decrease, from the current 93 weeks down to 73 weeks by the end of the year.

Improved Wireless Service

An unexpected potential benefit of the current payroll tax legislation is that it may, indirectly, result in improved wireless service.

One of the reasons this tax extension passed with so little strife is because Republicans in both the House and Senate dropped their demand that the tax cuts be offset by cuts in federal spending. Rather than cut spending, Congress agreed to sell more broadcast bandwidth to wireless companies.

The plan is for the federal government to offer television broadcasters an opportunity to sell some of their broadcast spots back to the government. The government will, in turn, auction those spots to companies who need increased wireless capacity – like cell phone companies. Congress believes the government can sell the broadcast spots for far more than it will have to pay to get them back. The profit from the sales will make up for some of the revenue lost as a result of the tax cut extension.

If the plan is carried out, it could mean that wireless service will become faster and be able to handle larger amounts of data. Increased capacity also means wireless providers could take on more customers, theoretically resulting in lower prices for everyone. Unfortunately, this part of the bill isn’t set to take effect until 2014, and is scheduled to be completed by 2016. So if there are savings to be had, we won’t see them for a few years.

While passage of the tax holiday extension is good news, there is some bad news in the longer-term. The current bill extends the lower Social Security tax through 2012, but a number of other taxes and credits are also due to change at the end of the year.

The child tax credit will decrease to $500 per child, and tax rates will go up on investment income and gifts. In addition, everyone currently pays a 10 percent tax on the first $8,700 they earn, regardless of their income bracket; that tax will increase to 15 percent at the end of the year. The marriage penalty paid by people filing their taxes jointly will increase as well. Between penalties, credit reductions and tax increases, economists estimate that Americans will see their collective tax bill increase by $500 billion starting in 2013. While it could be great for the federal deficit, it would be terrible for the economy.

Though both Democrats and Republicans say they want to prevent the tax hikes, they disagree as to how best to achieve that goal, and we may have to brace for another Congressional showdown in the fall.

3 Ways You Could be Affected by the Payroll Tax Bill was originally featured on Quizzle Wire

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4 Ways to Turn Home Deductions into Tax Savings

Kristie Lorette — Sun, 19 Feb 2012 16:55:09 +0000

Your home is not only your castle, but it is also a tax savings haven. Homeowners enjoy tax deductions that non-homeowners don’t. Make sure that you are using your home to the fullest when it comes to tax deductions. It’ll save you a lot of money, blood, sweat and tears when tax time rolls around every year.

Mortgage Points

Record low interest rates in 2011 led many people to finally realize the American dream of homeownership. When you established your mortgage, the lender most likely charged you points. Each point you paid is one percent of your mortgage amount. These points are tax deductible for the tax year in which you paid them.

Record low mortgage interest rates also enticed many homeowners to refinance existing mortgages. Points that you paid on a refinance are also tax deductible. The difference is that you can deduct the points over the life of the loan on a refinance but all at once on a purchase.

Real Estate Taxes

While some tax deductions are one-time events, others are ongoing benefits of owning a home. Real estate taxes, or property taxes, are one of the ongoing tax deductions you enjoy as a homeowner. Your real estate taxes are fully tax deductible from your federal tax returns. You can deduct the property taxes for each tax year that you own the home.

Seller Costs

Another abundant action in 2011 was the selling of homes. Many homeowners chose to sell their current home to upgrade or downgrade their primary residence. At record low rates and purchase prices, it was prime time make the change. As a seller, you also incur costs, such as a real estate agent commission, marketing fees and fees the seller is responsible for paying when the buyer establishes a new mortgage. All of these fees are also tax deductible.

Mortgage Interest

Another ongoing deduction is the interest you pay on your mortgage. Generally, the mortgage interest is fully tax deductible. For each year that you own the home, the mortgage interest is tax deductible. Since you pay more interest in the first few years you have the mortgage, the first few years will have higher tax deductions than the latter years of a mortgage.

Homeownership comes with several benefits. One of the biggest benefits is the ability to write off a variety of costs from your federal tax returns, which equates to a great deal of tax savings for you.

See the latest mortgage rates and go into your next buy knowing where you can leverage your ownership to save on taxes.

4 Ways to Turn Home Deductions into Tax Savings was originally featured on Quizzle Wire

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Tax Write-Offs that Can Save Your Small Business Money

Juliana Weiss-Roessler — Thu, 19 Jan 2012 11:00:47 +0000

Whether you are self-employed out of your home or have an actual office with a couple of employees, the government considers you a small business, and what this means for you come tax time is (drumroll, please) write-offs.

Go ahead and do a little dance of joy, because small business write-offs can save you a ton of cash at tax time if you know what to look for. If this is your first year operating a small business, you might still want to consult with a tax professional until you are comfortable with all of the new possibilities open to you when you fill out your tax forms, but to give you an idea of what’s out there, below are just a few possible things you might be able to write off, depending on the type of business you run.

“Office” space… and all that that implies.

If you’re renting a space specifically as your office, the entire cost can be deducted come tax time, but even if you work from home, it’s possible to deduct at least part of your mortgage or rent. Possibly even more exciting, if you use them for business, part or all of the cost of things like electric, gas, water, cable, internet, and phone bills can be sliced off of your tax bill, too. Typically if you’re working from home, you shouldn’t write off more than about 50 percent of any of those things just to be safe.

Zoom zoom.

Did you talk business on that trip you took to the Bahamas? Well, okay, that one may or may not count, but if you can genuinely claim that a trip had business implications, you can write off part or possibly even all of it. Pretty nice when you consider the cost of things like gas, airfare, and hotel rooms. You probably can’t write off the souvenirs you picked up while you were there, though… unless they are meant to be gifts for clients. Even beyond larger trips, if you drive anywhere for business in your car, you can log mileage (51 cents per mile!) and deduct that from your taxes as well. And hopefully it goes without saying that you can deduct the car itself if you use if for business, though only a portion if it splits time between business and personal use.

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Equipment and supplies.

Using that new laptop to keep in contact with clients and write proposals? Business expense. Ditto for that new all-in-one printer you just got, and the desk, chair, paper, pens – pretty much any kind of “office supply” type of product you can think of. Even your fancy new coffeemaker and books or DVDs you needed for research probably count. Be creative – although if you start to feel like you’re being too creative, we recommend checking with a tax professional.

Entertaining and networking.

Whether you’re meeting with a prospective client for coffee to see if you’d like to do business together, discussing the strategy you’ve come up with for launching your new line over lunch with employees, or valeting your car before you head in to a mixer where you hope to pick up new clients, all of these are potentially valid expenses to write off.

Tax prep and other professional fees.

Yes, you can write off the cost of getting someone to save you money on your taxes. In fact, you can even write it off if you buy a few tax books and try to do it on your own. Along those lines of using the tax books to do it yourself, any education expenses related to the work you’re doing can also be deducted. Other “professional” fees you might deduct include payments to lawyers or consultants for business-related fees.

These are just a few of the many things that small businesses can deduct, but you can already see how quickly they might add up if you’re smart about how you use your money. To make it even easier at tax time, keep a separate bank account and credit card for business expenses. You’ll be saving money in no time!

Tax Write-Offs that Can Save Your Small Business Money was originally featured on Quizzle Wire

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5 Tax Advantages of Homeownership

Kristie Lorette — Fri, 29 Jul 2011 11:00:38 +0000

People talk a lot about the pride of homeownership. While there is an emotional side to owning a home, there are also some financial benefits. Specifically, there are several tax advantages that homeowners can enjoy that renters cannot. Learn at least five tax benefits that you may be able to take advantage of as a homeowner:

Mortgage Fee Deductions

Each time you get a mortgage to purchase or refinance a home there are fees involved. While some of these are sunk costs, others are deductible costs. You can typically write off mortgage fees, such as:

Prepaid interest
Origination fees
Loan discount fees

You should consult with your accountant prior to deducting any points or fees, but these are the fees that are generally tax deductible.

Property Taxes

Once a year when your tax bill shows up in the mail, it may cause you to cringe. Some get especially frustrated when they see how much the school taxes are when they don’t have any kids in the county school system! The good news is that you can deduct your property taxes from your federal tax returns. This is an annual deduction for each year that you live in the home.

Mortgage Interest

Generally, you can also write off the entire interest portion of your home loan payment on your taxes as well. A typical 15- or 30-year fixed rate mortgage is mostly interest for about the first half of the mortgage term anyway, so you are truly maximizing your tax deduction during those years.

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Private Mortgage Insurance

Some lenders will allow borrowers to put less than a 20 percent down payment on a home purchase. However, when a lender finances more than 80 percent of the purchase price of the home, it typically requires private mortgage insurance, also known as PMI. Private mortgage insurance usually remains part of your home loan payment until you pay down the mortgage so that it is only 80 percent of the value of the home. While PMI is not typically expensive, it is also a payment that is tax deductible.

Selling Costs

When you sell your home, you also have the right to deduct some of the costs. Some of the selling costs you can typically deduct include:

Real estate agent commissions
Title insurance
Legal fees
Advertising
Administrative costs
Inspection fees
Repair and redecorating costs 90 days leading up to the sale

While there is a lot of pride involved in being a homeowner, there are also some added financial bonuses. Owning your home allows you to make multiple tax deductions, depending on your situation. Some are one-time deductions, while others are ongoing ones. Now you can look at being a homeowner as both an emotional and financial investment.

Learn other ways to be a smart homeowner with helpful tips and tools from Quizzle.com. At Quizzle, you can find out if you can save money on your monthly mortgage payment and improve your credit so you qualify for the best mortgage rates.

5 Tax Advantages of Homeownership was originally featured on Quizzle Wire

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5 Tax Breaks for Job Seekers

Juliana Weiss-Roessler — Thu, 09 Jun 2011 12:00:43 +0000

Looking for a job can be a draining experience – both emotionally and for your bank account. You have to update and print out copies of your resume. You need business cards. You have to drive to and from interviews, and sometimes even pay for parking. Not to mention, the costs you’ll incur if you decide to take any classes to better your skill set and increase your chances of getting the job you want. Thankfully, the US government knows just how expensive this process can be and offers many tax breaks for people searching for a job in their current field:

Travel

If you’re a banker in Seattle and you fly to Los Angeles to look for banking jobs there, you can deduct any expenses related to the job search from the trip. This would include things like the flight, hotel, networking meals and drives to interviews, but would not include that day trip to Universal Studios.

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Employment Agency Fees

Any fees you pay to employment and outplacement agencies are deductible. However, if your employer pays you back for those fees – even in a later year – you must include the amount you receive in your gross income for that year up to the amount of your tax benefit in the earlier year.

Preparing, Printing, and Mailing

If you spend money to print and mail your resume to potential employers, every cent is deductible. You can also deduct the cost of having someone professionally prepare your resume and any business cards you purchase.

Calls

In this age of ubiquitous cell phones, this one probably doesn’t mean as much as it used to, but local and long distance phone calls to prospective employers are also deductible.

Limitations to Deductions

Unfortunately, if you decided to take a long break after your last job ended before you began looking for a new one, job search expenses cannot be deducted. You also can’t deduct any job search expenses if you’ve never had a job before, or if you’ve decided to change careers and look for a completely different kind of job. Check with your accountant to make sure you’re eligible for these deductions.

For more information about job search deductions, see IRS Publication 529, Miscellaneous Deductions. Or get free job search help to minimize costs when finances are at their tightest.

Learn other ways to hang onto your money at Quizzle.com, where you’ll get access to great money tools like the Debt Paydown Planner that will help you get out of debt faster so you can save potentially thousands in interest.

5 Tax Breaks for Job Seekers was originally featured on Quizzle Wire

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