What Not To Do On Your Taxes According to Experts

Being careful is import when completing your taxes and this year should make you a little bit nervous if you are preparing your taxes yourself. Even professionals are making a lot of mistakes according to the Government Accountability Office.

In a study done in 2014, 10% of preparers did not calculate a normal tax return correctly. The final error rates for tax preparation according to the study was 50% for self-prepared returns and 60% for professionally prepared returns. Of course, the professionals more than likely handle the tough returns. Still, those are alarming numbers.

Some errors are obvious mistakes while others are harder to deduct, keep these difficult areas in mind this tax season: foreign investments, charitable giving, real estate taxes, gambling winnings, and state refunds.

If you have foreign investment accounts or savings accounts, make sure to report them to the IRS. If the IRS is able to discover the account later, you can face a penalty up to $10,000.gaooffice

When making contributions to charity, keep a record so you can prove that you gave to a qualified charity. And when purchasing an item for a charity event, you can only deduct the portion above the value you are receiving.

Real Estate taxes can be a trick if you just purchased the home as some are paid on the closing statement. And an office in the home is a great deduction, but make sure not to claim more space than the office occupies.

If you have gambling winnings during the year, offset those winnings with loses you experienced and documented. You can’t take a lose of gambling, but limiting the amount of your winnings that is taxable is really nice.

Finally state refunds. State refunds on tax return filings are taxable the next year as income on the federal return. Yet federal tax refunds are not taxable, you get to keep the full amount of those funds.

 

 

The Sharing Economy Can Make You Money

Taxation of this Sharing Economy:

The Internet, along with its rising social media, has created some very new opportunities for people to earn extra cash. This ‘sharing economy’ theme is defined as this – Putting up some unused resource either for sale or for rent (like a skill, parked vehicle, or empty room). This might seem a bit minor at first, but according to one statistic, this sharing economy actually represents as much as a $110 Billion dollar market.

One community marketplace for finding or listing or booking lodging all over the world, is Airbnb. This is done on the Internet and by mobile phones. They carry more than 500,000 listings for 33,000 cities, in 192 countries worldwide.

The Benefits:

If a taxpayer rents out a property for less than 15 days a year, they don’t have to report that income or the expenses on their tax returns. This enables them to rent out property for short periods of time with NO TAX liabilities. In order to qualify for this exception, all you have to do is use your home personally for over 14 days, or for 10% of the overall number of days, that you rented it out to other people for a fair price.

Another Investment Possibility: Prosper and LendingClub

If you are not someone with a spare bedroom or car that you can share, but you have available cash sitting around, you can make some money this way. Peer to peer lending through sites like Prosper or LendingClub gives you the opportunity to earn some extra cash. They allow individuals to either lend or borrow money, with a certain degree of anonymity, using interest rates that are credit score based. Risk levels are also factored in. Both of these sites will allow investors to lend out their money in increments as low as $25.

Create Your Post-College Budget In 6 Easy Steps

Establish A Post-College Budget In Just 6 Steps

Congratulations on having earned your diploma and on having received a job offer. This time of life is guaranteed to be exciting.

As you begin planning your next moves, it is vital to have a budget. How do you create a post-college budget? Following are several things that I discovered after having graduated and started my first adult job.

Consider Your Monthly Income

Investment
Investment (Photo credit: LendingMemo)

You might have an awesome starting salary, but you should not use this figure to write out your budget. Determine how much you’re going to be bringing in after taxes every month instead. Remember that federal taxes, social security and Medicare are all going to be deducted from your check.

Employees are going to have to pay 6.2% of their wage earnings, up to minimum wage. A tax rate of 1.45% is paid for Medicare. If you are self-employed, however, these rates are going to be double.

Next, figure your federal income tax rate according to your projected earnings. You will be surprised by how much is going to be deducted from your check.

Think About Retirement
Decide how much you are going to invest in your 401k. Will your employer be matching your 401k? Use this match to your benefit as it is included in your compensation. Invest the minimum in order to receive this match.

If you are able to, make an immediate effort to max out your 401k. Should you invest with pre-tax money, this is going to lower the rate for your federal income tax at the year’s end. Always use low-cost funds to invest.
H&R Block gives amazing tips for investing.

Take Advantage of Pre-Tax Dollars

Use a Health Savings Account or a Flexible Savings Account to save pre-tax dollars. Do you have forthcoming medical expenses that you can cover with pre-tax money? Braces, contacts, glasses, doctor visits and prescriptions are things that you can use this money for. These savings are automatic.

Wisely Choose Your Housing
It is very easy to move into a luxury apartment after graduating. This is what I did. In retrospect, I wish I chose an apartment that was more affordable.

Housing advice varies. Some people say that you should spend no more than 30% of your earnings for a rental or 28% for your mortgage.

List Your Monthly Expenses
List all of the bills that you need to pay each month including sewage, water, rent, Internet, electricity, groceries, cable, car insurance, gym fees, debt payments, renter’s insurance, cell phone services, etc. You will have to allocate you monthly earnings for these expenses. Budgets are used to track and manage this spending.

Save Money!
Put aside monies to create an emergency fund. You never know when car maintenance issues and other expenses will arise.

You can also invest in a traditional IRA or ROTH to take your savings plan a bit further.

Creating a solid financial house early in life will assure you of a comfortable financial future.

Important Dates For Filing Your Tax Return Forms

Important Dates For Filing Your 2013 Tax Return Forms

As the year comes to an end, it is important to start thinking about filing your 2013 taxes. While it is true that taxes are not due on the first of the year, it is still important to understand the important dates on the IRS calendar for 2014. There are a few dates you should know.

January

On the 15th all estimated taxes for the last quarter of 2013 are due. Also the 31st is the deadline for employers to send out tax information. This is also the deadline to file your 2013 tax return forms without penalty if you did not pay your taxes for the previous year.

March

The 17th is the date when corporations must file their taxes by.

April

The 15th is recognized as tax day for individuals and partnerships.

June 16th

If you got an extension on your individual tax return, then this is the date it is due. This only applies to military personnel and people traveling abroad.

September

The 15th is the deadline for business extensions on tax returns to be filed.

October 15th

This is the due date for individuals who were granted a 6 month extension on their tax returns.

Keep in mind that these are only dates that are specifically related to fling your 2013 tax return forms. There will be other dates you will want to keep in mind with your taxes and for these you can turn to the IRS website. Here you will find all the information you need as well as great resources for ensuring you pay your taxes correctly.

Tax Carnival Ecstasy – July 30, 2013

Cover of Book, The Art of Investing in America.
Cover of Book, The Art of Investing in America. (Photo credit: Wikipedia)

Welcome to the July 30, 2013 edition of Tax Carnival Ecstasy. We start this edition with some short term financial goals by Viveka on the blog ‘My Journey to Millions’. John Schmoll takes a look at investing in the stock market and the level of difficulty that you face when you invest for retirement. And finally Bill Smith looks at annuities as investments and the tax implications of investing in them. Hope you like all the articles, bookmark our carnival, like on Facebook, tweet the link and come back real soon.

David presents Quick Way to Save Money on Booking a Hotel Reservation posted at Financial Nerd, saying, “Interesting Way I saved money by booking a hotel reservation”

viveka presents Top 15 Most Popular Coupon Websites posted at Top 15 Most Popular Music Websites, saying, “Here are the 15 Most Popular Coupon Websites ranked by a combination of constantly updated traffic statistics.”

deductions

viveka presents Short Term Financial Goals posted at My Journey to Millions, saying, “Short Term Financial Goals – My Journey to Millions”

filing

viveka presents The Detroit Bankruptcy Should Teach You that Nothing is Guaranteed with your Finances posted at My Journey to Millions, saying, “Detroit\’s recent bankruptcy should teach you something about risk and your personal finances and retirement. Real possibility of reduction in pension and trimming of bonds”

viveka presents Dividend Investment Portfolio Archives posted at My Journey to Millions, saying, “Dividend Investment Portfolio Archives – My Journey to Millions”

retirement

John Schmoll presents Is Investing in the Stock Market Really That Easy? posted at Frugal Rules, saying, “Many are overwhelmed when it comes to investing in the stock market. With a little homework and due diligence it can actually be simplified quite a bit and can lead to more efficient investing for long term needs like retirement.”

viveka presents Will I ever Lose my 401k? posted at My Journey to Millions.

tips

Bill Smith presents Are Annuities a Good Investment posted at 2011 Tax, saying, “There are two different types of annuities: deferred annuities and immediate annuities. The type of annuity you choose depends on how soon you expect to receive payments.”

That concludes this edition. Submit your blog article to the next edition of tax carnival ecstasy using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Filing Your Taxes At-Home – It’s Easier Than You Think

Filing Your Taxes At-Home – It’s Easier Than You Think

Most customers aren’t aware of just how easy it is to learn how to do your own taxes online. Whether you are employed and have received your tax information or are self employed and have tracked your income and business expenses, you can be easily guided through the entire process of completing your taxes with programs like Turbotax 2013 and be done in less than an hour.

information hydrant
information hydrant (Photo credit: Will Lion)

What kind of information are you going to need to start?

First, you’re going to fill in your identifying information including your name and address and determine whether you are filing for taxes on a single or joint application. Using the information from the income for the previous year, you are prompted to fill in the information through a series of questions. The answers to the questions are imported to the tax form, making it simple for anyone to do their taxes at-home, without having accounting experience.

It’s unlikely that errors are going to be made through the forms, as you’re prompted to answer questions and the system is designed to pick up common errors that are made. In most cases, the information must be correct or in the correct order to go forward with the income tax return.

Once the questions are completed, the report will be generated and you have the option to print the tax forms at-home or file the forms electronically.

Filing your taxes at-home is simple to do and can save you hundreds of dollars every single year.