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Last-Minute Tax Tips: What You Need to Know to Lower Your Bill

Income tax day is less than a month away, and I gave money-saving tax tips on TODAY this morning — plus advice for how to spend your refund.


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Behind On Your Taxes? 5 Ways To Expedite The Process

We’re in the home stretch as far as tax filing season goes, and according to the IRS, more than 30 million Americans haven’t filed yet. If that’s close to home, this morning on TODAY I shared 5 tips to speed up the process if you’re behind on taxes. Take a peek!


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This Or That: Tax Refund Edition

This year refunds are averaging about $3,000, according to the IRS. What should you do with yours? Using them to pay down high interest rate credit card debt, or popping them into a retirement account where you qualify for matching dollars, are both good moves.

This morning on TODAY, I played a game of This or That: Tax Refund Edition with Willie Geist and Al Roker that was too much fun. Take a peek to see who won (and options for how to spend your tax refund this year).


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Today’s Money: My Tips For Saving On Your Taxes

Every year at tax time Americans leave billions of dollars on the table. Make sure you get your slice by following these tips in my segment below for grabbing every deduction and tax credit. Read more on

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4 Steps For Protecting Your Identity This Tax Season

itheftLast Thursday, as you may have heard, TurboTax put a halt to it’s filing of state tax returns after a spike in suspicious filings. By Friday at 6 p.m., it was back in business. But a number of states that stopped issuing state tax refunds amid similar worries – including Vermont and Massachusetts – have yet to turn the spigot back on.

What’s the deal? In the past couple of years, there has been an increase in fraudulent returns filed in the hope of gaining a tax refund that belongs to someone else. In 2013, 1.6 million taxpayers were affected – and the IRS paid out $5.2 billion in fraudulent refunds. This year, state tax refunds are being targeted in particular.

Why? Because they’re low-hanging fruit.


Mailbag Monday: Prioritizing your Principal

suburbOn 4/15, you made a comment about using tax refund toward principle on mortgage. I have to assume you are suggesting pay off your house, save the interest and not be having to make the monthly payments. That sounds like a good plan. I had the idea to get rid of my second mortgage, a very long life second.  I’ll never see the end of it, if I make payments.  But I could pay it off.  I had 3 financial advisers say that was a bad idea because even in retirement, I will need write-offs, and current interest rates are cheaper than what they will be. Why the disconnect here? Also, I heard on the radio that mortgage interest deduction will go away as part of Obama care. What do you know of this?



Today’s Money: Should you spend or save your tax refund?

It’s officially Tax Day! And for more than two-thirds of Americans, filing is likely a pretty uplifting experience. Why? They’re getting refunds averaging $2,800 according to the IRS.

What are they doing with them? According to Principal Financial, the top three uses for the money are: save or invest it (51%), pay off short-term debt like credit cards (38%) and pay off long term debt like a mortgage (24%). But what if you’re looking for other ideas? I was on Today this morning with a few suggestions. Check them out below:

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Wednesday Welcome: Making the Most of Company Benefits

This week we welcome Sophia Bera, a certified financial planner who caters to millennials — though this particular post, about how to maximize your company’s benefits, is a good reminder to us all. Whether you’re just starting a job or you’ve been with the same company for years and haven’t re-looked your benefits in a while, the below advice will help you make the most of what your company is offering.

Bera - HeadshotDo you remember what company benefits you signed up for when you were first hired?  Did you make any changes during open enrollment this past year?  When it comes to working for a company, the salary offered isn’t the only aspect of the job to take into consideration. Unfortunately, many people only skim through or completely overlook their company benefits package – and this can be a big financial mistake.  Many of these benefits come out of your paycheck pre-tax which helps you lower your tax bill and save you thousands of dollars in the long run!

You might be leaving a lot on the table if you fail to comb through your benefits and take advantage of what you company is offering its employees. It’s more than just an employer match in a retirement account (although that is a big benefit you need to be sure to grab). Here’s where to start and what to look for:

Request Your Company Benefits Package 

If you work for a company with an HR department, you might want to start there. The department (or whoever is in charge of staffing concerns, if you work for a small business) should be able to provide you with some sort of handbook or paperwork that details what you are entitled to as an employee.

It can be really overwhelming to dive into pages and pages of technical writing on your benefits, but understanding the perks that come with your job is important! By utilizing what you can, you could save thousands of dollars in expenses throughout the year.

Common Company Benefits

Before you start feeling too bogged down in all the paperwork that explains your benefits, take a look through this list so you’ll know what to be on the lookout for:

  • Retirement Benefits. The biggest benefit you need to be taking advantage of is any kind of retirement account your employer offers, such as 401(k)s, 403(b)s, or a SIMPLE IRA. Sign up for the retirement plan your company offers and make sure you contribute enough to meet the match if there is one. This is free money! If your employer offers to match your contributions up to 5%, you need to contribute at least 5% of your salary to get the full benefit.
  • All Kinds of Insurance. It’s widely known that the majority of companies offer some sort of health insurance coverage to their employees. But they also offer other types of insurance that you need to take advantage of to make sure you and your family will be protected in the event of a disaster or emergency. Your company benefits could include life insurance, disability insurance (both short term and long term), a health savings account, and flex spending accounts (one for health care and one for childcare costs).
  • Financial Perks in Addition to Your Normal Salary. In addition to your regular paycheck, your company benefits might include things like stock options in the form of a employee stock purchase plan (or ESPP). This allows you to buy company stock at a discounted price. You might also be entitled to reimbursements on your wardrobe, commuting expenses, or other costs that you incur that are a direct result of working for your employer. This will all depend on the company you work for, so be sure to look into this and ask questions!

Finally, don’t forget about vacation time. On the surface, this might not seem like a financial perk. But remember, when you take vacation days you’re getting paid for hours that you’re not actually working.  Be sure to make the most of your paid time off.

Your company benefits package can be a lot to look through, but it’s crucial you take the time to do so. If you’re want to learn more about benefits, you can take a more in-depth look at my post on my website, Gen Y Planning, on how maximizing your company benefits could save you thousands of dollars!

About Sophia: Sophia Bera, CFP® is the Founder of Gen Y Planning and is a financial planner for Millennials.  She’s passionate about helping people in their 20s and 30s across the country with their money. She is a contributor for AOL’s Daily Finance website and has been quoted on various websites and publications including Forbes, Business Insider, Yahoo, Money Magazine, InvestmentNews, Financial Advisor magazine, and The Huffington Post. She was named one of the “Top Financial Advisors for Millennials” by the website Follow her on Twitter @sophiabera or sign up for the Gen Y Planning Newsletter to stay up to date on financial articles geared towards Millennials.

Frugal Friday: Sales Tax Holidays

iStock_000017007129SmallWe’ve already established that back-to-school sales are in full swing. But have you done your shopping yet? Can I urge you to wait a bit?

Not only because the sales are bound to get better — I noted that in the piece linked above, and dealnews recently published in-depth analysis about laptops, clothing, and dorm furniture — but because in many states, sales tax holidays are on their way.

What does that mean, exactly? Savings for you, first of all. About 17 states waive sales tax for a couple days during the back to school season. But it also means you should carefully plan your shopping, because there is a bit of fine print — most states place restrictions on what, exactly, can be purchased tax-free, and a limit on the price of the items that fall under the tax-free umbrella. This link has a rundown of participating states, but in general, most that participate will offer a tax break on clothing, shoes, and often computers that are priced under a set limit. For instance:

  • Oklahoma will exempt tax on clothing and shoes priced under $100 between August 2 and 4.
  • New Mexico, which is hosting its holiday the same weekend, also has one of the most generous policies. The state will exempt tax on clothing priced up to $100, computers priced up to $1000, computer equipment up to $500, and school supplies up to $30.
  • Maryland will exempt clothing and footwear up to $100 during the week of August 11 through 17.
  • In Tennessee, the sales tax break run from August 2 to 4 and applies to clothing and school supplies under $100 and computers under $1,500.

Is the savings huge? Well, no. Oklahoma’s state sales tax is 4.5%, not including local taxes.  That means residents will save $4.50 on a $100 clothing purchase. If your state’s tax rate is higher, you’ll save more. Tennessee, for example, has a state sales tax of 7%, which could mean a savings of up to $105 on a computer purchase.

Bottom line: It makes sense to buy when you can skip sales tax, if your state is offering the opportunity. But it also makes sense to double up with a promotion or sale — and luckily, many stores will run them in conjunction with the sales tax holiday. So keep an eye peeled for those deals in your area, and you could walk away with big savings.

The Supreme Court Is Deciding On DOMA. How Can LGBT Couples Prepare?

It is widely expected that this month, the Supreme Court will release a decision regarding the constitutionality of the Defense of Marriage Act (DOMA). It is a decision highly anticipated not just among constitutional scholars, but among the entire LGBT community and supporters of same-sex marriage across the country.

DOMA defines marriage (at the federal level) as a union between a man and a woman; as such, it excludes same-sex spouses from tax, healthcare and estate planning benefits that are given to heterosexual spouses.

iStock_courthouse and lgbt flag“Every aspect of a person’s financial life, legal life, and their rights their benefits — DOMA pervades all of that. It’s everything that’s recognized and not recognized at the federal level,” explained Lisa Siegel, a senior wealth planner for Wells Fargo’s Private Bank. Siegel is also an attorney and has helped many LGBT clients navigate this tricky legal and financial terrain.

Siegel says there is not much a same-sex couple can do in advance of the Supreme Court ruling, but there are many things to start considering and documents to start gathering in case DOMA is repealed. Here are some of the areas that require particular attention:

Tax planning. Siegel had advised her own clients to file an extension for their 2012 taxes, in the event DOMA is upended and a same-sex couple can select “married filing jointly” on their federal tax return. For same-sex spouses who didn’t file an extension, she says it’s easy to go back and file an amendment (the IRS has an FAQ and the amendment form here), and the IRS accepts amendments for the past three years. However, depending on the salaries of the spouses in question, Siegel says that filing jointly might not mean owing less money to the government. “You might owe more because of how much money you earn. You have to then have an accountant run a projection to see,” she said.

Estate planning. Heterosexual spouses have access to the unlimited marital deduction, which means that husbands and wives can transfer assets to and from each other (during life and after death) with little or no tax. Under DOMA, same-sex spouses cannot do this. “If this section of DOMA were to be repealed, this would entirely change their estate planning,” Siegel said. “In many cases, [a repeal] would require them to revise their estate plan.” Siegel recommends consulting an attorney with specific experience in LGBT estate planning, or a financial planner with an Accredited Domestic Partnership Advisor (ADPA) designation.

Beneficiary designations. Siegel noted that the estate plan isn’t the only document that would need to be revised: living wills, healthcare proxies, life insurance policies and retirement plans are among the documents that would need to be updated so that same-sex spouses can list each other as their primary benefactor. “[DOMA] affects spousal rollovers — think about IRAs and 401(k)s,” she said. “On qualified plans, there’s no automatic right for [a same-sex] spouse to receive access.”

Wedding planning. Many of the financial and legal ramifications of a DOMA repeal would primarily affect couples who are already married (in states allowing same-sex marriage), but Siegel noted that couples for whom a favorable DOMA ruling might inspire a wedding have their own set of considerations. Primarily: the assets they’d bring to a marriage. “Because marriage has not been an option and many couples have been together for many, many years, as have been some of my couples, we’re finding that these couples are getting married and have pretty much had a lifetime together. They’re coming into the marriage with significant assets,” she said. For these couples, Siegel recommends a prenuptial agreement. “It could be a potentially unpleasant exercise. But important!”

Finally, if the court rules to uphold DOMA, Siegel emphasized that it is still worth it for same-sex couples to meet with their attorneys and financial advisers to make sure their financial plans — and especially, estate plans — are up to date.

“In general, estate plans should be looked at every few years anyway,” Siegel said. “It’s not a bad idea to go back to advisers and say, now what?”