One provision of the American Recovery and Reinvestment Act of 2009 was a tax credit that came to be called Making Work Pay. As the name of this credit implies, it is only for those with earned income. You should be aware of this oddly named tax credit, and I’m pleased to offer a detailed description of what it means to you in a guest post on the Turbo Tax Blog titled Taxes 101: Make Work Pay.

FTC disclaimer – I received no compensation for this post, in fact I even bought my own copy of Turbo Tax this year. If they offer me a T-Shirt, however, I’ll take one and disclose it here. If you FTC people read me and would like to send me a T-Shirt, I’d even wear it.

Joe

• Bar Stool Economics
• Funding Matched 401(k)
• Impacting your FICO score
• Income in Respect of a Decedent
• Fun with Schedule A

• Tax Prep Tips for the Procrastinator
• Federal Tax Credits For Energy Efficiency Upgrades End December 31.
• Why The Tax Credit For First Time Home Buyers May Be A Bad Deal For You.
• Here's a great comeback when negotiating to buy a property
• Paying off Debt in 9 Steps pt 3

written by JOE \\ tags: make work pay, taxes 101, TurboTax

Today, I am again guest posting at Jeff Rose Good Financial Cents.

The article Missed Tax Deadline? File an Extension offers an overview of the rules and requirements for an extension to file your taxes. Please join me there and let Jeff know if you enjoyed the article.

Joe

• A Financial Goodbye
• Good Financial Reading This Week
• 10 Reasons You are Not Rich
• Emergency Funds
• A Recipe For Disaster

• Tax-Free Day
• Individual Tax Extension Deadline is October 15th
• Sunday Money Roundup - Monsoon Season Is Here Edition.
• Income Tax: The Pros and Cons
• Inaugural Edition of Green Fairways Carnival

written by JOE \\ tags: filing extension, Finance, tax

2009 is almost over, and if you believe that the decade started in ‘00, then your decade is ending as well.

It’s time to consider the last minute things you can do to save on your taxes. With just three weeks left until the new year, take advantage of what you can.

• If you have an FSA (flexible spending account) and have any balance remaining, there are some easy ways to spend on items you can submit for reimbursement. Visit the eye doctor, and get new glasses. Review the list of reimbursable drugstore items and stock up. Bandaids, Ace Bandages, aspirin, cold medicine, birth control, there are quite a few things you can buy that are covered by FSAs. Don’t lose the chance to get your money back.
• It may already be too late to adjust your 401(k) withholding for 2009, but it’s the right time to consider bumping your percent for 2010.
• If you are right on the edge of the standard deduction or the ability to itemize (for single, it’s $5,700 married filing joint, $11,400) consider this strategy; In odd years, make two year’s worth of donation, half in January , half in December. In December, make the January mortgage payment, and take the interest for 13 months worth of payments. Also in December, make the next property tax payment. In simple terms, cluster all itemized deductions you can into the one year, and take advantage of itemizing. In the even years, make just the 11 months mortgage payments, no charitable donation, and only the property tax due. This strategy works best if you were very close to the numbers mentioned.
• If you are 70-1/2 or older and don’t itemize, donating to a charity directly from your IRA can have the same effect as the deduction as the withdrawal is not considered income.
• If you are in the 10 or 15% tax bracket, consider selling appreciated stocks and take advantage of a 0% cap gain rate.
• If you are already retired, try to forecast your taxable income for the year and convert just enough IRA money to a Roth to “top off” your present bracket.
• Any change in family status, marriage, divorce, having a child, etc, and you should check that all you beneficiary designations are still how you want them.
• As always, if you have losses in any non-IRA stocks or mutual funds, you can use up to $3000 of that to offset ordinary income. If you still want to hold the position, you can but it back after 30 days to avoid running afoul of the 30-day “wash rule.”

Any other ideas I may have overlooked? Pass them along!

Enjoy the weekend,

Joe

• A Roth Roundup
• Social Security Benefits II
• DVY - The iShares Dow Jones Select Dividend Index
• Donating that IRA money?
• Choosing between a 15 or 30 year mortgage

• Guest Post Wednesday: MossySF on International Bonds
• Ways to reduce income tax when you began making IRA withdrawals?
• Should You Have a Mortgage in Retirement?
• Mortgage Calculator With Frugal Spin
• Dear President Obama: We Need Healthcare Reform Right Now.

written by JOE \\ tags: tax, tax tips, Taxes

One financial term often used, but not always understood, is ‘Marginal Tax Rate’ or Marginal Rate for short. It’s used so often that financial writers take its meaning for granted. Today, in a guest post at Bible Money Matters, I offer What Is A Marginal Tax Rate, And How Can You Use It To Save? Please visit and let me know what you think, I’ll stop by as well to answer any questions that you may have.

Happy Monday,
Joe

• Money Merge Account Analysis Pt 15
• Using a Roth IRA to Maximize Your Wealth
• More Roth Lovin'
• Why you need Insurance
• Income in Respect of a Decedent

• Personal Retirement Plan Investment Options
• Is Credit Card Use Ever Wise for Those Wanting to Save Money?
• Scam Email From The IRS Making The Rounds; I Just Got It.
• How Much Does Your Money Matter to You?
• Marginal Tax Rates and You

written by JOE \\ tags: effective tax rates, tax rates, Taxes

The Emergency Economic Stabilization Act of 2008 renewed the rule allowing one (over 59-1/2) to made a charitable donation of IRA funds without claiming the money as income. If you itemize, you can already take donations off your taxable income so this would have no affect on you. But, if in retirement, your deductions don’t total enough to itemize, this is a way of saving the tax due on the money you’d withdraw from the IRA by donating it directly to the charity.

Also remember, that this year (2009) the requirement to take RMDs is suspended, so if you don’t need the money to spend, start to review your marginal rate and consider a conversion to a Roth IRA. For a Married Couple, filing joint, taxable income up to $67,900 is taxed at 15%, this is a great opportunity to get the tax out of the way while it’s still only 15%. Something to consider.

Joe

• Net Unrealized Appreciation
• Inheriting or Bequeathing an IRA
• Pre Tax vs Post Tax savings
• Phantom Tax Rates
• 2009 Tax Rates and other Tidbits

• Marginal Tax Rates and You
• My Life as a Volunteer Tax Preparer - Week 8
• Great Debates: Traditional vs. Roth IRAs
• Six Secrets to Saving Money When You Are Young
• Planning For Retirement Late in Life

written by JOE \\ tags: charitable donation, charity, economic stabilization act, Retirement, roth ira

Last week, I broke the news that the IRS was considering enforcing the laws allowing them to collect tax on personal use of cell phones provided by one’s employer. Today, a Statement was issued by IRS Commissioner Doug Shulman:

This month, the Internal Revenue Service asked for comments on ways to simplify compliance with rules related to employer-provided cellular telephones. The current law, which has been on the books for many years, is burdensome, poorly understood by taxpayers, and difficult for the IRS to administer consistently. Some have incorrectly implied that the IRS is “cracking down” on employee use of employer-provided cell phones. To the contrary, the IRS is attempting to simplify the rules and eliminate uncertainty for businesses and individuals.

Although some of the proposed changes would add clarity, the current law will inevitably leave widespread confusion among employees and businesses. Therefore, Secretary Geithner and I ask that Congress act to make clear that there will be no tax consequence to employers or employees for personal use of work-related devices such as cell phones provided by employers. The passage of time, advances in technology, and the nature of communication in the modern workplace have rendered this law obsolete.

A victory for the little guy, I suppose. And for our cell phone providing employers.
Joe

• Baseball Tax
• Borrowing to buy Tax Free Munis
• Small Break for HomeOwners
• IRS thinking of taxing employee cell phone use
• Frugal Friday Week 22

• HOW TO DOWNLOAD YOUTUBE VIDEOS TO CELL PHONE, iPod, PSP!PC
• Income Taxes
• Reverse Cell Phone Lookups - Trace Cell Phone Numbers of Nuisance Callers Easy and Fast
• When Cell Phones Meet VoIP
• Self Employment Tax

written by JOE \\ tags: cell phone, irs, Taxes, underground economy