3 Ways in which you can accelerate debt reduction

If you are under severe debts and do not know what to do, then you should understand that debt reduction should be your primary focus. This is because debt reduction can help you reduce stress and levels and leaves you with more cash that you can save or utilize in investments to make money.

Some of the ways in which you can reduce your debts and also make sure that you save are as follows.

  1. Plan a budget to manage finances: It is most essential for you to formulate a budget that you can use by which you can assess your financial condition. The budget that you formulate should list all your expenses and also your monthly income. It should have categories to tell you how much you spend and where you spend it. This helps you in getting a clear picture of your finances and also makes you aware about where you are spending and how much you are spending. You must also make provisions in your budget so that you can save a certain amount every month. You must subtract the total expenses from the total income and the amount that you get is to be used to pay off your debts. If you feel that this amount is not sufficient, then you must try to reduce your expenses or increase your income. The budget keeps you motivated and helps in debt reduction as well as savings.
  2. Do not spend on what you do not need: It is important for you to know that when you are paying off your debts you are to try and spend as less as possible. This is to be done so that you can save enough to pay off your debts. Every month make a list of the things that you really need and buy only those things. Things that you desire but do not need must be avoided. The best way to refrain yourself form making such purchases is to wait. If you want to buy something that is very expensive wait for a few days to make the purchase. You will gradually realize that the desire to possess it has left you. This will save you a lot of money and you will be able to pay off your debts with ease. After you have finished paying your debts, if you still practice this, you will have enough left for investing and making money.
  3. Do not add up more debt: You should try not to add more debt to your existing debt. This is because when you are already paying off debts then it is best that you do not take on new debts. If you take on new debts, then you will have to pay a certain amount of money towards it. This will lead to a shortfall in the amount that you have to pay off towards your current debts. In order to avoid that and accelerate debt reduction you must not take on further debt. This will also help you save and make more money in future.

These are a few ways in which you can tread the path of debt reduction and opt for a new way life where you have enough to save and enough to invest.

Filing A Tax Extension

Need More Time to Pay Taxes? Read On!

Taxpayers that owe money on their taxes will be glad to know that they have some options if they can’t afford to pay the full tax liability immediately.

Here are 10 things the IRS would like people to know about taking more time to pay their taxes:

  1. If a taxpayer can’t pay the full amount, they should pay as much as they possibly can. Paying as much as they can now lowers the amount of penalties and interest that will be added to the amount owed.
  2. Depending on the circumstances, taxpayers might qualify for an tax extension on the amount of time they have to pay by making an installment agreement, delay or Offer in Compromise.
  3. If you’re unable to pay, you should write to the address or call the number that appears on your bill.
  4. You could also think about financing the payment of your taxes by getting a loan. A bank or credit company will still charge interest and fees, but will generally be less than those charged by the IRS for late payment.
  5. You could qualify for additional time to pay your taxes in full, up to 120 days. There is no fee for this arrangement, and taking this route could minimize the interest and penalties that get added on.
  6. You could also pay with a payment plan, in which you can make manageable monthly payments for a one-time $105 fee. However, if you can arrange monthly debits from a bank account, the fee drops to $52. And low-income taxpayers can get a fee of just $43.
  7. You can apply for the payment plan with the Online Payment Agreement form that can be found on the IRS website, or file a 9465 form or an payment plan request, or you can call the IRS at the number found on your IRS bill.
  8. Taxpayers might also qualify for an Offer in Compromise, which is a settlement that the IRS makes with the taxpayer making the liabilities less that what was originally owed. The offer won’t be accepted if the IRS determines that the taxes could be paid in one sum or with some kind of a payment agreement.

  9. If you do set up a payment agreement, the IRS could still file the tax lien, securing the interest of the government until your final payment is made.

  10. You should always respond to an IRS notice. If you fail to pay your taxes or make a payment arrangement, the IRS could take collection actions.

For more information, visit the IRS website at irs.gov.

Checking The Status Of Your Tax Refund

There are a few ways that you can go about checking the status of your tax refund. The IRS actually makes this easy for you to do. The following are some things you should know when you want to check for information about your refund.

  1. One way to check your refund is to go the IRS website and search for the where’s my refund button. It is an interactive process where you answer a few simple questions. You will need to know your tax payer identification number, the status you used for filing and the dollar amount of your refund. This system is available at all times. You can find out if your information has been received and is being processed and also what date you can expect your refund.
  2. Information should be available three days after the IRS sends you information saying the have received your return. This is when you e-file. If you mail in your return it will usually take three or four weeks for your information to be available.

3.  Where’s my refund also has links to information about your individual situation if you need them. For example if you did not receive your refund within a certain amount of days after the IRS said you should, you can start action to trace your refund.

4.  Anyone who is visually impaired can also use this service if they use they have the correct equipment.

  1. For taxpayers who do not have access to the Internet or who would rather use the phone, that is an option as well. You can call the IRS hot line number and enter the same information you would need for where’s my refund.

6.  The IRS now even has a smart-phone app that allows tax payers to check on their refund status. You can download the app from the Apple store or the Android store. The download is a free download and easy to use.

Not Stressing Out During Tax Time

It is that time of the year again.  Yes, tax season.  This is the time of year that a lot of people get really stressed out.  There are several ways to lower these stresses.

  1. The first thing that needs to be done is to gather any records and information a person might have.  Being organized in a situation like this really comes in handy to lower stress levels.  Keeping all records in one place together will help out so much.
  2. Another great thing is to be prepared.   Most everyone knows that W2s and 1099s have until the last day of January to be sent out by employers.  Because of this, people need to be ready for what is about to come and look for these things.
  3. Filing electronically is free sometimes and takes away the hassle of waiting around forever for the paper file to get back to them.  This is a great way to lower stress levels because it is often easy to do and is the fastest means of filing taxes.
  4. Staying on task definitely helps to lower stress.  Having your mind go off in a million different directions does not help anyone, so multi-tasking in this situation is not a good thing.
  5. Do not forget to consider all options.  Some of these options include a person filing themselves or going to a professional to have it done for them.  There are often free volunteer tax accountants that can help tax payers as well.  Having more than one option keeps the flow moving and keeps stress levels low.  People just have to be open minded about the different options.

6.  Starting early and finishing early when doing taxes is a great help on stress reduction.  Getting the hassle out of the way as soon as possible is a big relief and is also a big burden that seems to be lifted off of people.  A person feels so much better to just get it done and out of the way.

7.  Another great thing is to take advantage of all the helpful resources and tips that are out there for you.  The official website of the IRS is a great resource to use.  This site has helpful forms, answers, tips, and updates on any changes that a person should be aware of.  All of these things can help to make the process easier and to go more smoothly.

  1. Taking breaks every once and a while is a great method of reducing stress.  These breaks should consist of standing up, stretching, and anything else that puts a mind at ease.  This helps to calm the nerves and also to allow your mind to think straight.

  2. Do not forget to check over everything before the taxes are sent.  Rushing can a loss of money which makes people very stressed out.  Calculations should be double checked so that errors are not made for this very reason.

  3. If problems come up, do not freak out.  Freaking out only increases stress, so this should be avoided.  If worst comes to worst, take the time to pamper yourself.  Do whatever it takes to not stress out and get the job done.

Did You Know About These Tax Changes?

By the start of 2010, President Obama proposed a number of tax changes for 2011. It was until the end of that year that eleventh hour tax changes were approved and signed into the law. While many of us are well aware of the latest celebrity break ups and hook-ups, only a few seem to know about these tax changes.

It pays to known about tax rates and any changes made regarding these taxes. It gives you a better idea of what you are going pay and how much you can save. Believe it or not, knowing about the tax rates and changes can greatly help in efficient financial planning.

In the 2011 bill, a few changes are made, a few things remain unchanged and a few temporary ones will expire in 2012. For better or for worse, these changes will affect individuals and businesses in one way or another. Let’s take a look at what these changes are.

  • The lowest bracket remains 10%, this is a temporary extension till 2012. Otherwise it would have gone up to 15%. 25%, 28%, 33% and 35 % tax bracket for individuals is also temporarily extended. The current law related to these tax brackets was going to expire in 2011. If it wasn’t extended the current brackets would have gone up to 28%, 31%, 36% and 39% respectively.
    • Standard deduction rates remain largely the same. For a single taxpayer, the amount of deductions is $ 5,800. For married couple filing jointly, it is $11,600. Senior citizens will get an additional standard deduction of $ 1,150.
    • The personal exemption amount for last year was $3,650 and this year it is raised to $3,700.
    • Extensions are also made on deduction of state and local sales tax and deduction of private mortgage insurance premiums. Through 2011, state and local sales tax can be deducted instead of state and local income tax. Mortgage insurance premiums will also continue to be deducted by homeowners.
    • The Alternate Minimum Tax exemption for 2011 is $48,450 for single tax payers and $74,450 for those filling jointly. Married couple filing separately will have to pay $37,225.
    • 2011 tax changes also include a temporary repeal on Personal Exemption phase-out. This will be a good news for high-income tax payers. Personal exemptions of high-income tax payer will be reduced to adjusted gross income increases.
      • Pease limitations are also temporarily repealed. According to Pease provisions, itemized deduction is reduced by 3% at the top of the brackets for high-income tax payers.
        • Capital gains and dividends will also remain low through out the year.
          • Under the temporary tax cut on Employee payroll tax, the percentage is reduced to 4.2% from 6.2 in 2010. The rate for self employed individuals is reduced from 12.4% to 10.4%.
          • For teachers a $250 deduction is also introduced as a deduction for states sales taxes in lieu of state income tax deductions.

          This is a guest post from Albert Harris, contributing writer at CreditDonkey.com.  Avoid other costly mistakes in 2011 by reading our credit card tips.

          How To Do Your Own Taxes

          Filing your taxes each year is like running a race with hurdles and hoops to jump over and through with no clear idea of what prize will await at the end of the race. Sure it may be fun for some, but if you are like most people, it is a dreaded affair. At least there is the hope of a positive lump sum of money when you are done.

          Doing your own taxes is much cheaper than going to a CPA and is probably worth the effort on your part should you not have a very complex return. When should you fork out the money and get help from a CPA?

          1.      You have inherited a large sum of money. There is a complex set of rules that your CPA will know about when you receive a large gift or amount of money. It’s best to trust their advice in this situation.

          2.      You are starting a small business. This is highly recommended when you start; then, if you feel comfortable, you can do your own taxes in the years to come. You want to get as much money as possible and flying solo when starting out is risky.

          While getting your taxes done by a professional has gotten cheaper over the years, it still is not fun paying someone before the possibility of paying more back to the state and federal governments. You will find that it may include a little painful stretching as you venture to do your own taxes this year, but it will be cheaper, and you will feel satisfied with the new skills you have learned.

          The most common concern with doing your own taxes is that you will not get as much back from Uncle Sam than if you went through someone like H&R Block. TurboTax guarantees you will get the maximum amount by using their software. And they have boiled down the complex federal tax system to simple, easy steps. Pricing on TurboTax software packages range from the simple filer for free to someone that owns a corporation. Even so, it will be cheaper than having a professional do it for you. The good thing about TurboTax is that it makes it simple enough for the amateur.

          Even though the price is cheap and the process is simple, there are a couple things outside of TurboTax to remember.

          1.      Keep track of all of your employers, investments, retirement accounts, charitable donations, and other income before you start. This will help you not miss out on potential returns and will help you miss out on penalties.

          2.      Organize. The better you keep things together, the easier the process will be.  After you have written down a list of all accounts and income, follow up with employers or fund managers that you have not received anything from. Once things are put together it involves following easy steps that TurboTax provides.

          About the author: Gunter Jameson writes about minimalism, pell grants, and anything else that interests him.

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