People often link when they retire with when they “should” start claiming Social Security. Yet, if you retire in your early 60s and start Soci…
To paraphrase a famous quote, taxes are an unavoidable part of life—including when you invest. While taxes shouldn’t direct your investing strategy, they need to be part of your game plan. “In short, what might appear to be a lucrative investment opportunity might not look as rosy after considering the tax implications of the transaction,” […]
Every direct employee of a company should receive a W-2 form in January. The W-2 is the base document that defines your tax obligations, so it is important that you review and understand yours. However, some people are confused by some of the form's numbers — for example, why the wage listed on a W-2 form does not always match their salary — and simply fill in the information from each box into their tax forms without giving it a thorough review to verify that the information is correct.
Employers can and do make mistakes on W-2s, and these errors can cost you money as well as time and effort to correct downstream tax ramifications. Let's take a look at the W-2 form in a bit more detail.
Understanding Your W-2 Tax Forms
First, verify the pertinent baseline information in the spaces labeled with letters, namely your Social Security number and both addresses (yours and your employer's). Assuming that's correct, look at the block of eight boxes in the uppe...
The past year has fractured our world in countless ways. Now, as people look to pick up the pieces, those managing debt need to account for their position in our…
When you think of freezing, credit may not be the first word that comes to mind. But knowing how to freeze your credit can prevent you from pain even worse than frostbite: identity theft. What a credit freeze does is simple: It protects customers by blocking access to their credit reports. Whenever a consumer applies […]
You’d think the Federal Open Markets Committee (FOMC) would be meeting under happier circumstances this month. Covid-19 hospitalizations have fallen off a cliff, millions of Americans are getting vaccinated every day and consumers have kept spending thanks in part to the $900 billion relief package passed late last year. Economists believe that after a rough […]
As students finalize their college selection, consider these questions to gauge which school is the right fit in the era of COVID-19.
Staying home for months on end has taken a toll on everyone, but it can also take a toll on your tax return. Here are five unexpected ways the pandemic…
Health savings accounts (HSAs) let you save money to cover the cost of a wide range of qualified medical expenses. HSAs offer a trio of tax advantages, and you can invest money saved in an HSA in markets for better returns on your contributions. Just note that HSAs are only available if you have a […]
Death and taxes may be the only certainties in life, but death taxes are only a remote possibility for most people. The vast majority of Americans won’t ever have or…
Congratulations! You have just been handed your first little bundle of joy in the hospital and have embarked on the long journey of parenthood. It is a trip full of joyful experiences that make the corresponding aggravations worthwhile, and it comes with many benefits — some of which are tax-related. You can look forward to taking advantage of these child-related deductions and benefits.
- Earned Income Tax Credit (EITC) – Designed to help lower income taxpayers, the EITC is a tax credit that is scaled along with income and the number of dependents claimed. See IRS Publication 596, "Earned Income Tax Credit (EITC)" for details on qualifications and the scaling criteria. T...
If you’re itching to travel again, Delta Airlines is ready to help with improved welcome bonuses on its credit cards. For a limited time, new cardholders can earn 70,000 or more miles with one of six Delta SkyMiles American Express cards. Having so many different versions of the card to choose from is a blessing. […]
If you’re feeling overwhelmed by years of paperwork, take heed. You may be able to lighten your load when it comes to your credit card statements. Experts suggest that credit cardholders should keep their personal credit card statements for a minimum of 60 days. But how long all that extra paper (or those extra bytes) […]
Americans struggling with debt might get some additional unpleasant tax surprises this year: From needing to pay taxes on forgiven debt to seeing reduced deductions as a result of loans…
It is easy to lump deductions, credits, and exemptions into the same basket of tax-saving mechanisms, but they are distinctly different. One major difference is that the Tax Cuts and Jobs Act of 2017 (TCJA) did away with personal exemptions for the tax years 2018-2025, so you won't be able to use exemptions for a while. Here are the simplified differences:
- What They Reduce – Deductions and exemptions both reduce your taxable income, and credits reduce your overall tax bill. With reference to Form 1040, deductions – and when they apply, exemptions – all take effect before line 15 (your taxable income), and credits are applied after line 16 (the tax you pay on that taxable income).
Deductions and exemptions reduce your taxes proportionally to your tax bracket, but credits reduce your taxes dollar-for-dollar regardless of your tax bracket. In other words, if you are in the 10% tax bracket, a $1,000 deduction saves you $100 on your taxes, but...
Itemize Or Take The Standard Deduction On Your Federal Income Tax?
Exchange-traded funds are a little like Millennials: Born in the early 90s, not really relevant until after the Great Recession, and a force to be reckoned with ever since. In…
After a year of little to no travel, you’re probably ready to get back out and explore the world once it’s safe. But just because you’ve gotten your vaccine or…
It's important to ignore the noise when it comes to your decision to quit work.
Shopping for their first home in New Jersey, Alyse Storzieri and her boyfriend Robert Engel faced a tough market. So when they found a house they loved last June, the…
Shopping for their first home in New Jersey, Alyse Storzieri and her boyfriend Robert Engel faced a tough market. So when they found a house they loved last June, the…
President Joe Biden proposed multiple “free college” measures while on the campaign trail. Do any of them have a real shot? Some experts think so. “The issue is bipartisan in…
Learning about personal finance is life changing and it goes beyond learning how to budget. Here’s how to decipher common and important person…
While many deductions were cut or modified with the Tax Cuts and Jobs Act (TCJA) of 2017, most tax credits were retained. Tax credits are more powerful than tax deductions because they directly subtract from your tax bill (deductions only reduce taxable income). Refundable tax credits are even better, since refunds can be greater than your tax bill.
Explains Betterment Head of Tax Eric Bronnenkant, "Credits are, in general, more valuable than deductions, because they reduce your taxes dollar-for-dollar." Do you qualify for any of the following nine tax credits?
1. Earned Income Tax Credit (EITC) – One of the most popular and powerful tax credits available to low-income families, the EITC allows up to $6,660 in refundable credits (for married couples filing jointly) for those who have three or more qualifying children in tax year 2020. ...
Tax Benefits Of Having Dependents
Whether they want to change the world or simply make their business vision a reality, startup founders dream of giving society something it needs but hasn’t created yet—and doing it at scale. For the less industrious, startups also have another appeal—eye-popping valuations that hopefully lead to an initial public offering (IPO) with an astronomical return […]
The housing market typically follows fairly reliable seasonal trends, but 2020 won’t be known for following predictable patterns. Every year, colder weather and the holidays accompany a shift downward in…
