This morning on Money 911, we heard from a woman who inherited an IRA but was a bit confused about what this means for her taxes. To see what we told her, plus for information on the new mortgage settlement, check out the video clip below.
This morning, I visited Kathie Lee and Hoda to give viewers a little tax-time quiz. Do you know how many people file their taxes last-minute? If you haven’t filed yet, what’s your best option? To find out the answers to these questions and more, check out the video clip below.
This morning on Money 911, we heard from a man who wanted to maximize what he could earn from an inherited coin collection. To see what we told him, plus what to do with profits from a real estate sale, check out the video clip below.
On our latest Money 911 segment, we heard from someone who has gotten stuck as a cosigner on a loan on which the primary borrower has fallen negligent. Is there any way he can get out of this situation? To hear our answer to his question — plus whether or not you can write off trips to the bank as a business expense — check out the video clip below.
This morning on Today‘s Money 911, we heard from a woman who wanted to know how to use her $10,000 tax return. Should she: pay off student loans, pay off her credit cards, or boost her emergency savings? To see what we told her, plus tips on taking Social Security, check out the video clip below.
This information comes from Mark Steber, the chief tax officer for Jackson Hewitt. He passed it along to prove a larger point: Though those changes have made an impact on your taxes over the years, a bigger impact is made by the changes that have occurred in your own life: marriages, births, adoptions, new homes and new jobs.So as we approach tax season, take some time to think about what happened to you in 2011 that could affect your filing. In this economy in particular, such changes may be more prevalent because larger numbers of people are taking on freelance jobs, offering financial help to an elderly parent or taking advantage of low interest rates on mortgages. What to look out for:Self-employmentMaybe you decided to moonlight as a consultant or freelancer last year to bring in some extra income or pad your resume. That extra cash comes with extra tax consequences — and a few misconceptions, says Steber.
An employer is required to send employees a W-2 for any income paid to them during the year, regardless of amount. If you’re doing freelance or contract work, the business that hired you must send you a form 1099 if it paid you $600 or more over the course of the year; however, you’re required to report any income on your tax return — whether you received a 1099 or not. This is important because with most freelance and contract work, taxes aren’t taken out in advance. You need to plan for them by saving a portion of every check so they do not surprise you come April.
It’s worth your money to talk to a tax adviser because that person can also show you how to offset a portion of what’s owed with deductions stemming from your new side job. For example, you may be able to deduct mileage, supplies, a portion of your cellphone charges, etc.
Caring for an aging parent
I’ll bet you didn’t know there was a tax perk here, but there may be if you meet a support test: Essentially, your parent becomes your dependent if you provide more than half of his or her support. Mom or Dad doesn’t even have to live with you, says Steber: If your parent is in a nursing home or care facility and you’re footing half that bill, you’ll likely pass that test. That means you could qualify for a dependent exemption as well as a deduction of medical expenses that you pay. One last caveat: Your parent can’t earn more than the exemption amount — $3,700 in 2011 — excluding Social Security.
Birth of a child
You can claim your child as a dependent, which could give you the same exemption we talked about above — $3,700 per dependent. You’ll also get a Child Tax Credit of up to $1,000 per child. If you adopted, you get to go one step further: You may be eligible for a refundable credit for qualified expenses, up to $13,360 per child. In most cases, if you’re married, you must file a joint tax return to capture adoption tax perks.
New home purchase
This is a big life change, and it leads to significant tax changes. If you have a mortgage on your home, you’ll likely be able to deduct mortgage interest and property taxes. That can shift you away from the standard deduction — generally taken by people who don’t own homes and don’t otherwise have a lot of deductions — and into itemizing, which opens you up to a host of other deductions, says Steber.
For one, you should start logging charitable contributions, which can be write-offs. You may also want to carefully track medical expenses to see if they’ll add up to an amount large enough to deduct (you can deduct medical expenses that exceed 7.5 percent of your adjusted gross income).
“When you buy a house, that changes the game in terms of your tax profile, and triggers the ability to itemize,” explains Steber.
If you changed your name, make sure you notify the Social Security Administration. Then understand that whether you file separately or jointly, you have to deduct the same way — meaning you both either itemize or take the standard deduction.
Finally, don’t be scared of the so-called marriage penalty. It rarely kicks in, and in many cases, marriage can lower your tax bill because it may pull a higher-earning spouse into a lower tax bracket. (However, if you’re both high earners with nearly equal incomes, you may end up paying more.) You should also check your current withholdings after getting married, just to make sure they’re still correct. The IRS has an easy calculator on its website to help you.
This article originally appeared in the Rochester, MN Post Bulletin.
Tax season is upon us, and with it comes a somewhat dizzying array of potential deductions and tax credits. This morning on Today, I sat down with Savannah to un-complicate the process. To see which deductions you should look out for (hint: job hunting costs are one!) and which ones might act as red flags for an IRS audit (like the home office deduction), check out the video clip below.
On Today’s Money 911 we talked about how you can reduce the tax burden to your heirs and how to invest that money if you’ve come into an inheritance. To learn more check out the video clip below.
On Today’s Money 911 we talked about what debit should be paid down first if you owe to credit cards, loans and the IRS and if it’s better to roll your 403(b) or 401(k) into an IRA or a Roth IRA. To learn about these topics and more check out the video clip below.
This morning on Today I spoke with Matt Lauer and Carol Ross Joynt on what it means to be an innocent spouse and how to survive financial infidelity. To learn more check out the video clip below.