When is borrowing from your 401K account a good idea?

Your 401K retirement account is something that is very important to your future retirement. However, like many other people you may be considering borrowing money from your 401K account to fund something that is important to you such as starting up a business. It goes without saying that you should never make a rash decision with regards to borrowing from your 401K account, as you could potentially be risking a comfortable retirement by doing this. However, there is sometimes occasions when it can be fine or even advisable to borrow from your 401K account as opposed to looking at other options.

Of course, it is important to always consider what other options are available to you when you are in need of funds, as you may find that there is something that is more suited to your needs and financially viable than using your 401K account. You should bear in mind that, other than under certain circumstances, you may end up paying hefty withdrawal fees/penalties for taking money from your 401K fund early. However, if you repay what you borrow within sixty days you can avoid these charges.

With this is mind, borrowing from your 401K retirement account on a temporary short term basis is often a good idea, as you will not be hit with the penalty fees. This is an ideal solution if you have a short term cash flow problem and know that you can repay the money within sixty days.

If you have a lot of high interest debt that is financially crippling you then you may also find that tapping into your 401K for a loan could be a good idea, as you can ease the financial strain. You will also find that borrowing from your 401K at a really low interest rate to repay a debt such as a credit card debt with a really high interest rate makes financial sense. However, you need to make sure that you do not get carried away and borrow only the amount that you actually need rather than being tempted to take a little extra – after all, it is your retirement money that you will be taking!

Essentially, borrowing from your 401K is something that would be considered ok if it is for a necessity such as medical expenses or something that is going to ultimately save you or make you more money, such as paying off high interest debt or investing in your own business. What you should never do is risk your future by taking money from your 401K simply to splash out on luxuries such as holidays.

Andrew writes frequently about personal finance as well as issues effecting both consumers and small businesses, covering everything from savings to mortgages to
business insurance cover.

Home Energy Tax Credits: Save Money With Energy Efficient Appliances

Home Energy Tax Credits: Save Money With Energy Efficient Appliances

Homeowners know that energy bills comprise a hefty chunk of monthly bills, and have recently been getting even higher. Add to that the responsibility many Americans feel toward being more environmentally conscious, and making more green choices becomes a clear choice. The federal government has made this an even easier option by offering a number of home energy tax credits, given to homeowners that choose to save money with energy efficient appliances.

How You’ll Save Money Using More Efficient Appliances

The biggest benefit to using high efficiency appliances in your house is that greenhouse emissions are reduced significantly. However, from a financial perspective, utilizing Energy Star or similar appliances can save you up to 30% on your monthly utility bills, even with the same usage. Your house will be more comfortable, and with replacing windows and insulation, the units that provide heating and cooling for your home will not have to work nearly as hard. You won’t have to sacrifice style or features on these greener items, as most manufacturers are making environmentally-conscious versions of the majority of their products.

What Tax Credits Are Available?

For the past several years, the government has been offering incentives to taxpayers for switching over to environmentally conscious devices. Not only will this mean money in your pocket, but will hopefully extend the lifecycle of our planet. The tax credits are available to those who own their own home, and it must be an existing house (as opposed to a new build). There may be more credits available dependent upon which state you reside in, so be sure to check your particular local government website for more details.

The amount of credit received depends on what type of appliance you’re installing in your house. The general rule is 10% of the cost of your purchase, up to $500. However, there are a number of appliances with a set dollar figure for their tax credits. Once you’ve determined what rebates or credits you qualify for, complete IRS form 5695 and submit it with your taxes. Save your receipts in the event you need to show proof of purchase.

So how much can you get for purchasing a “green” appliance? For replacing your insulation, roof, or doors, you will receive 10% of the cost, up to $500. This is often an ideal area to prioritize, as a better insulated home is a more efficient one. The home energy tax credit on windows is capped at $200, and to replace a furnace or boiler, the cap is at $150. Installing an advanced main air circulating fan, you’ll receive a $50 credit. Lastly, for any central air conditioners, air source heat pumps, water heaters, or biomass stoves, you will receive a $300 credit.

While the home energy tax credits can seem quite beneficial, it’s always best to remember to maintain low usage in the interest of reducing greenhouse gasses. Excessive usage of any utility will increase the bills, no matter how efficient.

Steve Tlapnek is a real estate investor who buys and sells homes throughout the St. Louis, MO area. For more information about Steve visit We Buy Ugly Houses Saint Louis.

Sales Tax Holiday Spurs Lots Of Shopping

This weekend, shoppers in the state of Massachusetts will be getting a sales tax holiday on August 13 and 14, with a respite from the usual 6.25% sales tax 2011. This is the seventh time a tax-free weekend has been held in the state since 2004, and backers hope that consumers will be lured into the stores to spend in spite of the bleak economy.

The Massachusetts Department of Revenue says shoppers saved almost twenty million dollars during the 2010 tax holiday.

A representative of the Retailers Association of Massachusetts, John Hurst, says this tax 2011 holiday will help low income families with important purchases at this time of year. At $2.500, the cap in Massachusetts is more generous than that in many other states.

In Florida, the sales tax holiday in 2010 increased tax revenues by seven million dollars, because of more sales of taxable items. A study funded by the Florida Retail Federation found that August sales were $293 million more than they would have been if the sales tax holiday had not been in effect.

Rick McAllister of the Retail Federation says, “This works out great for everyone concerned. Shoppers win because the prices are lower, and the stores win because they make more sales. The state is a winner too because this tax holiday really provides an economic boost.”

The state Tax commission of Oklahoma says the sales tax holiday of 2010 saved consumers almost seven million dollars in sales tax.

Sales tax holidays are catching on across the United States in recent years. Seventeen states have tax 2011 holidays this year, usually during the month of August to help parents stock up on children`s clothing and school supplies.

4 Steps to Setting Your Own Debt Ceiling

Use Your Tax Return for 2011 To Pay Down Your Debt

Debt is on everyone’s mind these days. The national debt has been covered by every major and minor news outlet for months. They finally reached a resolution to raise the debt ceiling. How nice. If only it were so easy for individual Americans to do the same. Unfortunately it is not, and many Americans find themselves in the same situation as their country. They are living beyond their means and are facing an impending crisis. So how do average American’s deal with their own debt crisis and pay the money owed to their creditors and on their tax return 2011?

1)Refinance

Interest rates have bottomed out and are at record lows. It is a good idea to look into transferring any debt held on high interest credit cards to a those with a lower rate. Pay close attention to transfer fees. You might also take out a home equity loan and go ahead and pay those cars off an cut them up.

2)Cut back

Austerity measures are something that has been advocated for the nation and it can work for you to. Find places where you can sacrifice some creature comforts for long term financial viability.

3)Pay more

By paying down your outstanding debt you reduce the amount of interest owed on outstanding balances. No one ever got out of debt paying only the minimum. Apply your 2011 tax return to this end.

4)Balance your budget

Set up a budget and stick to it. It sounds simple, but it is much harder to establish a budget and stick to it. However, once it is established it becomes habit.

Your Tax Return

Your tax return 2011 will need to be filed before April 15, 2012, for those not keeping track.  It’s important to be aware of the deductions you’re planning to take right now.  Keep track of your expenses and have them readily available for your tax professional to refer to when needed.

Preparing for your 2011 tax filing can be relatively pain free if you set up a system which organizes tax deductions, exemptions and tax credits. Start by having a clear understanding of your earnings.  Next keep a record of all your deductions.  Keep them organized by category.

Medical costs should be labeled and separated from other expenses.  Most people rarely accumulate 7.5% of their income in medical expenses, but many people do, so keep track of premiums for health insurance, taxi rides to doctor’s offices, co-pays costs, deductibles paid and medicines purchased.

Also keep track of taxes paid to the state and local jurisdictions, real estate taxes and interest paid for real estate. Keep a good record of church tithing and other gift giving. Watch your record keeping, don’t repeat things and don’t leave things out.  Allow your tax professional to throw out what cannot be used.

Preparing your 2011 tax does not have to be an ordeal, if you plan and prepare for their preparation.  Organize your records and keep the information up to date and properly labeled so both you and your tax preparer can identify them.  Be honest with your taxes because you don’t want to be audited and you want to keep a clean record with the IRS.  Always plan ahead and keep track of all your rightful deductions.

Handling Taxes Can Be Rough – Hire a Tax Consultant Instead

Managing your own business can be rough, especially if you’re a first time business owner. One aspect of handling a business that gives many people trouble is taxes. Learning the tax code can be very complicated and the law changes every year. If you want to stay on top, you need a professional that is up to date and can use the tax code to your advantage. An excellent tax consultant can help save you money, but sometimes trying to find one can be a hassle. If you want to stand any chance of recruiting a good consultant, don’t wait until tax season to do so. If possible, you want to book their services several months in advance. Even if you don’t think that you need a consultant now, why not give their services a try and see what they can do for you?

Handling taxes and legalese can be very complicated. If you’re not willing to learn the code yourself, hiring a consultant is the next best thing. As long as you find a trusted one, they can help save you unimaginable amounts of money. Of course, there is still the possibility of you hiring a green consultant, but if they are willing to learn, even someone new to the world of taxes can be a huge help. A fresh pair of eyes is always a good thing when it comes to managing a business. Make sure that before you hire someone, to check their background and former experience. Look over several candidates and pick the consultant whose speciality matches your business properly. Each consultant works in a specialized area, so you want to be sure that they can actually help you. The rules for tax applies different to single people, businesses, or contractors so choose the right person for the job.

It may be a hassle to hire a consultant the first time, but once you do, you often stay with the same person forever, except for retirement or death. Once you get through the upfront time consuming process of hiring, and they get the chance to show their stuff, they’ll be able to save you tons of time, money, and hassle. Many people with businesses that fail to have tax consultants sometimes run into trouble, so you may as well be prepared beforehand. You have no idea how much money you are leaving on the table until you hire the services of a good tax consultant.