internal revenue service Archives - 2011 Tax to 2024 Tax

Tax Diversification: Exploring Retirement Savings Options

Boost your retirement savings with tax diversification! Learn what factors to consider when it comes to selecting investments for your future.

Retirement savings can be boosted with the right tax diversification. But deciding which types of investments to include in your retirement funds, such as stocks and bonds, is an important consideration. Learn what factors to consider when selecting investments for your future and how tax diversification can help you save.

Understand the Different Types of Retirement Accounts.

Retirement accounts come in a variety of shapes and sizes. Traditional or Roth 401(k)s, IRAs, and employer-sponsored plans are all options to consider. Each account offers different benefits, such as tax breaks, the ability to defer taxes until retirement age, and more. It’s important to understand the different types of retirement accounts to determine which option is best for you.

Invest in Tax-Deferred Accounts to Maximize Savings.

Tax-deferred retirement accounts, such as a traditional IRA or a 401(k), are an ideal way to maximize your retirement savings. With tax-deferred accounts, you can make contributions and defer paying taxes until you withdraw your money in retirement. This allows you to leave more of your hard earned money invested and growing, ultimately boosting the amount of money saved for the future.

Utilize Tax-Advantaged Accounts for Maximum Benefit.

Tax-advantaged accounts, such as Individual Retirement Accounts (IRAs) and 401(k)s are just two of many options you can use to diversify your retirement savings. With tax-advantaged accounts, you are able to take advantage of great features that other investments may not provide; such as special tax deductions or deferrals, dollar limit amounts and catch-up contributions. It’s important to research which accounts are best suited for your individual financial status and goals so you can benefit from the highest potential investments for a taxed wealthy retirement.

Take Advantage of Employer-Sponsored Retirements Plans.

Employer-sponsored retirement plans offer additional tax advantages on savings. Contributions to a 401(k) plan, for example, are deducted from pre-tax income, meaning that your annual taxable income is reduced by the amount of money you choose to contribute to the plan. Depending on your employer and the type of plan it offers, you may also be eligible for matching funds or other benefits. It’s important to consider researching and taking advantage of retirement plans offered through your employer if possible in order to benefit from their extra advantages!

Consider Alternatives to Traditional Retirement Accounts.

While employer-sponsored retirement plans are a great way to save and benefit from tax advantages, they may not be the right option for everyone. If you don’t have access to an employer-sponsored plan or want additional options, there are other retirement savings vehicles available. ROTH IRAs allow growth on income that is already taxed so that withdrawals in retirement are tax free. There are also investment accounts such as brokerage accounts or mutual funds that don’t offer the same tax advantaged benefits as employer-sponsored plans or ROTH IRAs, but can provide diversification and offer different returns that you may find beneficial for your goals.

How To File Your Taxes on TurboTax

The first time you do your own taxes is often a nerve-wracking experience. You worry that you are going to miss something and get hit with a steep penalty from the IRS. Fortunately, you can use www.TurboTax.com to file your taxes yourself with confidence. Follow the tips below to learn How To File Your Taxes on TurboTax.

1. Gather Your Paperwork.
Getting your financial paperwork, including your W-2 and 1099 forms, together before working with TurboTax is a critical first step. Being organized at the start will save you a lot of time as you proceed

2. Check the Cost.
If your taxes are simple and you have only W-2 forms and bank interest statements to include, you may be able to file for free. Use TurboTax to determine whether or not you qualify for free filing by answering some simple questions as prompted by the program.

3. File Your State Taxes.
Federal taxes get most of the attention in the media, but you also need to file state taxes. Fortunately, TurboTax transfers all of your details to the appropriate state tax forms to save you time.

How To File Your Taxes on TurboTax — Photo by JeepersMedia

4. File Electronically.
TurboTax 2015-2021 lets you quickly and easily file your taxes online without needing to print and mail forms. The program walks you through deductions, credits and obligations to help you get the maximum refund to which you are entitled without risking penalties. Sounds like the perfect solution for many families and individuals across the country.

Get TurboTax Free Tax Filing

Most taxpayers already know about TurboTax Free Tax Filing, but in case you have not, then you need to find a way to learn more about the software as soon as possible. The free version of the software will save you a lot of money in accounting fees while making tax filing easy. It will help you calculate how much you are required to pay as well as the tax refund owed to you by the IRS. There are federal filing options and state filing options that send the return to the IRS for you.

The main disadvantage of hiring a tax accountant to do your taxes is that you will be forced to pay a lot of money for the service and might get some good advise on how to file yours taxes next year. The worst thing about it is that these professionals never give a quote in advance; they complete the work then quote an obscene amount. Charging for every Schedule D transaction makes you never want to trade a stock again in your life.

There are many other reasons why you should choose TurboTax Free Tax Filing. First and foremost, you will never have to worry about finding a professional to do your taxes for you. Secondly, the software enables you to file accurate returns even when your tax situation is somewhat complicated, and you can do that from the comfort of your own home. If you need a more sophisticated version for your business, you can easily upgrade your software, but the free version is absolutely fine for the vast majority of taxpayers. With all these offerings, it is easy to see why Turbo Tax is an industry leader.

Other tax programs also offer free tax filing options, including Tax Slayer, H&R Block and TaxAct. Almost always, there is an income limit to get the free version and you’ll need to pay for any state or city tax returns you need to file.

The EITC Not Always Claimed for Taxes

You would have been given a refund had you filed your 2011 tax return, but you never did. The IRS is holding onto $1 billion in unclaimed funds that will become the property of the federal government if tax filers don’t claim the funds before the end of the tax filing period. Over 1 million houses failed to file and are owed the money. Any many would get substantial refunds thanks to programs like the EITC.

Tax payers have three years to file a return and claim funds that they are owed. The people that do not normally file when owed tax refunds are part-time workers or students who do not make much money and therefore feel they will not be getting a refund. But they pay more into the system than is required and therefore would have gotten a refund had they filed. So everyone should file their taxes and learn as much as possible about deductions and credits that you can claim.

Earned income tax credit (Photo credit: Wikipedia)

The Earned Income Tax Credit (EITC) is one big area of refunds that are not filed. These are refundable tax credits and therefore are given to filers that have not paid much into the system but have earned some income. In 2011 the EITC was as high as $5,700 if your family size was large enough. There have been stories about illegal immigrants gaining the right to file 3 years of returns to obtain three years of EITC. Those numbers are not yet included in this report by the IRS. But if unqualified filers can get this great credit, shouldn’t you try to obtain the credit also?

H&R Block Answers Questions Regarding Tax Credits And Deductions For Education

Education expenses can be claimed as a tax credit on an itemized return, but under what circumstances? For instance, does a long-term course of study as an electrician count as a 4-year post-grad program? Tax software like H&R Block can help you answer these important questions.

According to income tax experts H&R Block, the American Opportunity Credit, or AOC, may be claimed by individuals who are working toward an educational credential such as a certificate or bachelor’s degree. That’s it.

H & R Block also advises its clients to look at the Lifetime Learning Credit as tuition and fees may be claimed under its rules as a deduction. One caveat is that the school must be eligible, and the courses must be helpful toward getting or improving career-related skills. A person does not have to be working toward a degree of any kind to claim this tax credit.

In fact, both the tuition and fees deduction and the Lifelong Learning Credit may be taken together, but the taxpayer must use different expenses to qualify. Go online to IRS.gov to consult Publication 970 about the Lifetime Learning Credit and the deduction for tuition and associated fees.

Another taxes and education question comes up regarding CLEP tests. Students wonder if the testing fees are deductible. Experts at H & R Block say no they are not for a couple of reasons.

CLEP tests garner an individual education credits for life experience or knowledge. However, as there is no real instruction or course being taken at an eligible educational institution, the CLEP test expenses are not legitimately deductible. This may be a source of frustration for some people who are enrolled in college or about to start and are trying to get ahead of the game as far as course credit goes. However, the IRS very narrowly defines what fees do and do not qualify as a deduction.

Go online to H & R Block at hrblock.com to get answers to more tax-related questions.

First Time Filers Should Use TurboTax.com

Filing taxes for the first time can be nerve racking and it is worse if you are late with your preparation. You may experience challenges gathering all your information so that is why it is important to plan ahead so that you are on time with your filing.

If your 2013 taxes are your first filing, you have to be mindful of who is preparing your taxes. You may choose to prepare the taxes yourself or hire a tax preparer. If you have been asking friends and family about filing yourself, you may have heard about TurboTax.com. TurboTax.com is the authority on tax filing. It offers free federal filing and other options for state returns. By filing your 2013 taxes with TurboTax.com, you will be given step by step directions, as well as great customer service. In addition, TurboTax.com will ensure that you learn about all the deductions that can be applied to you when you are preparing your 2013 taxes. While your experiences in life will give you some insight on tax filing,
TurboTax.com gives you all the information you will need as a first time filer to ensure that your filing is done correctly.

As you reminisce on your children and your fun times, you will remember that taxes were something that you did not worry about. Now that you are filing for the first time, you have to make sure it is done correctly. Visit TurboTax.com today to review all the benefits available for you, which include an easy to navigate site and guaranteed results. Be sure to check out TurboTax.com.