With the addition of a higher tax bracket for the wealthy and the elimination of some popular lower-income tax breaks, this year it’s especially important to make sure you’re getting every break you deserve, tax pros say.
If you’re planning to retire this year (or soon) what should you be doing right now? If you haven’t quite figured that out, we can help.
If you have a question about your taxes, here’s a tip: Be prepared to be very patient.
It’s tax preparation time again, which means it’s time to collect your records and hope for the best. it’s also a time when taxpayers quake at the thought of a potential audit.
The good news is your odds of being audited are low: In 2012, the latest year for which the IRS has released data, just 1 percent of all taxpayers were audited. And really, honest taxpayers have nothing to fear but inconvenience from an audit.
“To me, the real question is not how do I avoid an audit but how do I make sure I’m ready for an audit,” said Jackie Perlman, principal tax research analyst at H&R Block’s Tax Institute.
Still, it’s worth knowing what elements in your filing might catch the eye of the IRS. This year, there are some long-standing potential triggers, but also some new ones.
Everyone knows that not paying your taxes can get you into trouble with Uncle Same. But it turns out, the same is true if you do pay your taxes.
In the past three years, tax identity fraud has skyrocketed. According to attorney Steve Poporoff of the Federal Trade Commission, complaints about this relatively new crime have tripled since 2010. In fact, last year they made up almost half (44%) of the total number of consumer complaints the commission received.
Contributing to retirement accounts will allow you to take advantage of tax breaks for retirement savers and employer contributions, as well as capture valuable investment returns on your savings. To take full advantage of all the available retirement account perks, you will need to be able to save a considerable amount of money and invest it in a way that minimizes taxes and fees.
A lot of my fellow baby boomers, in their 50s and early 60s, find they have an option to take early retirement. Some are teachers or other public employees who can opt for retirement after a certain number of years of service, which often puts them in their 50s. Others have been offered an early retirement package from their company. The package seems like a lot of money, so they’re tempted to take it.
Early retirement often seems impossible. It’s difficult enough these days to retire at age 65, so the thought of retiring early is a pipe dream for most people. Yet somehow this dream has become a reality for some diligent savers. In extreme cases, a few people have retired at an age when most of us are just getting started.
One well-known example is the man behind MrMoneyMustache.com, who retired at age 30 after just nine years of working. While he is the exception to the rule, he thinks that should change. He views early retirement as something most people can attain.
Ever find yourself around the watercooler discussing with co-workers how your 401(k) is performing—likely leading to the increasingly popular “I’ll never be able to retire” discussion? It’s becoming a bit of a modern-day lament, begging the question: Why do Americans have this doom-and-gloom attitude about their golden years’ financial situation?
Academic, institutional and media reports tend to serve up workers with warnings—often wrapping up with a “save now and save more” silver lining. It doesn’t seem to be inspiring the masses. According to a Wells Fargo study, 37 percent of Americans expect to work until they are too sick to work or die.
It’s well established that if you start saving about 10 percent of your income for retirement starting at age 25, you’re going to be in excellent shape for retirement when you hit age 65. This fact should be emblazoned on every single college and trade school diploma issued in the United States today: start saving for retirement now, not later.