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2017 Finances and Money Issues

January 3, 2017 by Finance Gourmet

Welcome to 2017! Relax. Take a deep breath. There. Feel better? Good. Then let’s jump in. Finances Updated in 2017 With a new year, come some new numbers. There will be updates to the maximum 401k contributions, income limits for Roth IRAs, and others. Plus, there will be adjustments to the 2017 income tax brackets, the 2017 standard tax deduction, and more. And, of course, there is a new IRS mileage rate for 2017 as well. What about 529 plans? There aren’t a lot of updates to those numbers each year, primarily because most facets of 529 college savings plans are administered through the states, who aren’t always as keen on changing and updating everything. You’ll want to re-evaluate your financial plan for the new year, and you’ll want to review how your financial plan did in 2016. Plus, you’ll want to rebalance your portfolio, if you didn’t do it at the end of 2016. Retirement Plans 2017 A big part of most retirement plans are tax-advantaged savings accounts like your 401k plan, IRA accounts, and, for some of you, 457 plans, 403(b) plans, and various differed compensation plans. All of those need adjusted and reviewed for 2017 as well. …

IRS Phone Call Lawsuit Scam

September 1, 2016 by Finance Gourmet

I used to be a Certified Financial Planner. My wife is an attorney. I’ve dealt with finance, and business, and courts, and the legal system, as both a professional and as a writer. And still, when I get a call and the voicemail says, “This is the IRS…” I still can’t help but tense up. Phone Calls From the IRS Of course, then I remember that these phone calls from the IRS are a scam. Look, the IRS making phone calls is expensive. You have to put someone in a room with a desk, and a computer and a phone. This is confidential government data we’re talking about, plus there are rules, laws and regulations that govern how the IRS is allowed to interact with taxpayers. In other words, we aren’t talking about room full of $10 an hour temps dialing for dollars. It’s way cheaper and more efficient to have a computer crank out thousands of letters than to have people cold calling taxpayers on their home phone numbers. Besides, by law, the IRS must notify you, BY MAIL, IN WRITING, of just about anything that could vaguely be interpreted as negative happens to you. So, why did I …

Health Savings Accounts State Taxes

July 6, 2016 by Finance Gourmet

We’ve discussed before how much of a benefit a Health Savings Account, or HSA, can be for saving money on your taxes. Contributions to an HSA are tax deductible for federal income tax purposes, or in the case of pre-tax contributions, they are simply not part of your income for federal income tax purposes. In addition, all interest, or capital gains earned within an HSA are tax-free, assuming all withdrawals are made to pay qualified medical expenses.But, what about state taxes on Health Savings Accounts? State Taxes on HSA Accounts The Federal Government can’t force states to do things, although there are ways around that, such as make your drinking age 21, or you get less federal highway funds. So, the various states don’t necessarily have to go along with the Feds when it comes to what is and is not tax deductible. In some states, however, that just happens by default. For example, in Colorado, the state income tax form is based upon the taxable income that you calculate for your federal income taxes. In other words, if you deducted it on your U.S. income taxes, it is already deducted when you start doing your state income taxes. That …

Which Is Better HSA or FSA?

May 11, 2016 by Finance Gourmet

Which is better a flexible spending account or a health savings account? The answer to which is better between a health savings account or flexible spending account depends, unfortunately, on the specifics in which they are setup. However, it is relatively simple to determine which is better an FSA or an HSA. First, you’ll want to understand what an FSA vs an HSA looks like. When FSA Is Better Than HSA An flexible spending account, or FSA has many advantages over paying for medical expenses out of your own pocket. However, it has only one real advantage over a health savings account, or HSA. The only eligibility requirement for having and using an FSA is that your employer offers one. It doesn’t matter what kind of health insurance plan you choose, or whether that plan has a high deductible. In order to have an HSA, you must have a qualifying high-deductible health insurance plan. The reality is that the deductibles aren’t necessarily that high, and in fact, may be close to the deductibles on other health plans. But, if you don’t qualify for an HSA, then a FSA is better than an HSA. The only other advantage of an FSA …

When To Throw Away Taxes

April 22, 2016 by Finance Gourmet

Congratulations on filing your taxes. I hope they were too bad this year. Now, it is time to shred some taxes and their associated documents. Tax Shredding Time How long do you have to keep your taxes? Well, it’s the IRS, so the answer is of course, complicated and convoluted. However, for the most part, the answer is three years. But, before you fire up that shredder, and destroy your tax records, let’s look at the exceptions. I’ll tell you when you can just skip a section so it doesn’t get too tricky. Skip this section if you have never filed or paid late: If you paid the tax late, you may have to keep your tax documents longer. The rule is that you must keep your taxes for two years from the date your paid the tax or filed your return, but no less than three years. In other words, you can shred your 2012 and earlier taxes during 2016 (you just filed and paid your 2015 taxes), but only if you actually filed and paid your 2012 taxes in 2012. If you were late, you have to keep them for two years after you paid them. If you pay …

Avoid IRS and Tax Scams

March 7, 2016 by Finance Gourmet

The IRS is used as a way to scam Americans out of money every year. Some the tax scams are very sophisticated. Others, seem like they would defy common sense. This year, the IRS put out a list of the Dirty Dozen tax scams for people to look out for. Here are some of them. Promises of Big Refunds – This is where the complexity of the tax code bites the unwary. Yes, there are a lot of deductions, and tax credits out there, and yes, some of them can be pretty unknown, but don’t believe that you’ve been way overpaying your taxes all these years, if only you’d known about a tax loophole. Research and be sure you understand before you sign your name to any weird forms. IRS Phone Call Scams – Remember, the IRS is legally required to send you notifications of most actions before you get some phone call. Ask them to put it in writing. Also, IRS agents don’t threaten to arrest people out of the blue. Arrest, garnishment, and property forfeiture all require a court proceeding. Real IRS agents won’t tell you that this is your last chance and that you have to send money …

What Is Middle Class?

January 20, 2016 by Finance Gourmet

Who is middle class in America, and why does it matter? Middle Class Politics One favorite political maneuver is to come out in favor of the middle class. There are a lot of reasons for this. First, and foremost is that numerous studies have shown that no matter how much money they actually make, most Americans think that they are middle class. Thus, when a politician says they care about the middle class, most people make the assumption that the politician is talking about them. On a secondary level, the value in favoring the middle class, is that there is a deeply American assumption that the middle class is where you will find the normal, hard-working American people. Those who are wealthy, can be assumed to be either exceptionally lucky, exceptionally hard working, or exceptionally smart, depending on who you ask. Realistically, it is all three. One need only look at the number of seemingly less than intelligent, or motivated, celebutaunt children who just luckily have wealthy parents, compared to the rags to riches stories of various immigrants or sons and daughters who were born into poverty. Whereas, the poor are the exceptionally unlucky, unhard working, or unintelligent. The fact that …

Standard Deduction 2011 and 2011 Tax Brackets

July 16, 2023January 12, 2016 by Finance Gourmet

Current Standard Deduction and Tax Brackets The IRS has announced new 2011 tax numbers regarding the standard deduction for single filers and for those married filing jointly, as well as the 2011 value of the personal and dependent deduction. By law, these standard tax numbers are adjusted for inflation each year. As a result, these tax deductions can increase or decrease depending upon how prices change. What Is the Standard Deduction for 2011 There was a small adjustment higher in most IRS tax numbers due to inflation. That means that most taxpayers should benefit from higher income limits and wider tax brackets than they had on their 2010 income taxes. Standard Deduction 2011 Taxpayers must choose whether to itemize their deduction or take the standard deduction on their income taxes. For most taxpayers whose income comes primarily from a job as a regular employee, the decision about whether it is better to itemize or claim the standard deduction on income taxes comes down to how much mortgage interest they pay. Basically, if the mortgage interest deduction available is higher than the standard deduction amount, then itemizing makes sense. The new standard deduction amount for 2011 is $11,600 for married couples …

New Year Finance Checklist

January 4, 2016 by Finance Gourmet

It’s a new year. Contrary to popular opinion, for the most part, when it comes to money, finances, banking and investing, it doesn’t really matter if the year is new or not. That being said, plenty of people take the opportunity of a fresh calendar to take a fresh look at things like personal finance and their financial plans. So, here is a checklist of things to start thinking about to make sure you personal finances are lined up for 2016. 2016 Personal Finance Checklist Don’t get overwhelmed. Not all of this stuff needs to be done at once. Put a section on your calendar each week or two, and by the end of the first quarter, your finances will be reviewed, tuned-up, and ready for the year ahead. Banking Checklist Review your checking account statements and make sure your bank isn’t charging you fees just for having a checking or savings account. If you are paying monthly fees, or minimum balance fees, find a new account. Check with your current bank first, you might just be signed up for the wrong account. Remember, at today’s interest rates, there is no way having a higher rate compensates for having to …

Mortgage Tax Deduction End of Year

December 14, 2015December 4, 2015 by Finance Gourmet

Every year a plethora of financial articles come out telling people how to save money on their taxes at the end of the year. It’s a fine idea, and frankly, no stone should go unturned. However, the best tax planning takes happens year round. That being said, there are numerous last-minute ways to cut income taxes by making last minute moves in December. Today, we examine one of the most common end of year tax moves, paying your mortgage early. Check here to learn how to deduct mortgage interest on your taxes. Make Mortgage Payment Early to Deduct More One of the biggest tax deductions that is available to ordinary taxpayers is the mortgage interest deduction. Simply put, the mortgage interest deduction is the ability to deduct whatever amount you pay in mortgage interest from your income taxes. There are several rules and exclusions, but they don’t apply to most taxpayers unless you have more than $1 million in mortgages or several houses. This is one of those tax deductions with no income limits. You do need to itemize your deductions in order to claim the mortgage interest deduction. For many people, the amount of their mortgage interest deduction determines …